International Competition and Industrial Performance: Allocative Efficiency, Productive Efficiency, and Turbulence

Richard Caves and John Baldwin

Analytical Studies Branch Research Paper Series from Statistics Canada, Analytical Studies Branch

Abstract:

Trade exerts generally favourable effects on the performance of domestic manufacturing industries in the dimensions of allocative and productive efficiency. This paper reviews theory and recent evidence on these linkages and also explore a third effect-on the turbulence of competitive conditions and the turnover of business units. Calculations using primary census records for Canada over 1973-1992 indicate, with time and industry effect, controlled, market-share turnover, entry, exit, and mergers all increase with trade exposure. The effect is tied to market structures of differentiated products but broad international disturbances (North American Free Trade Area) also have significant effects. The normative significant of turbulence is mixed but has important positive components.

Keywords: Business adaptation and adjustment; Business performance and ownership; Current conditions; Entry; exit; mergers and growth; International trade; Trade patterns (search for similar items in EconPapers)
Date: 1997-10-15
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:stc:stcp3e:1997108e

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