Economic Performance under NAFTA : A Firm-Level Analysis of the Trade-Productivity Linkages
Did the North American Free Trade Agreement make Mexican firms more productive? If so, through which channels? This paper addresses these questions by deploying an innovative microeconometric approach that disentangles the various channels through which integration with the global markets (via international trade) can affect firm-level productivity. The results show that the North American Free Trade Agreement stimulated the productivity of Mexican plants via: (1) an increase in import competition and (2) a positive effect on access to imported intermediate inputs. However, the impact of trade reforms was not identical for all integrated firms, with fully integrated firms (i.e. firms simultaneously exporting and importing) benefiting more than other integrated firms. Contrary to previous results, once self-selection problems are solved, the analysis finds a rather weak relationship between exports and productivity growth.
Summary: | Did the North American Free Trade
Agreement make Mexican firms more productive? If so, through
which channels? This paper addresses these questions by
deploying an innovative microeconometric approach that
disentangles the various channels through which integration
with the global markets (via international trade) can affect
firm-level productivity. The results show that the North
American Free Trade Agreement stimulated the productivity of
Mexican plants via: (1) an increase in import competition
and (2) a positive effect on access to imported intermediate
inputs. However, the impact of trade reforms was not
identical for all integrated firms, with fully integrated
firms (i.e. firms simultaneously exporting and importing)
benefiting more than other integrated firms. Contrary to
previous results, once self-selection problems are solved,
the analysis finds a rather weak relationship between
exports and productivity growth. |
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