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Trade liberalization, roads and firm productivity

Matteo Fiorini, Marco Sanfilippo and Asha Sundaram

Journal of Development Economics, 2021, vol. 153, issue C

Abstract: We examine the role of road infrastructure in determining the impact of a reduction in input tariffs on firm productivity. We combine new geo-spatial data on road improvements in Ethiopia with establishment level data on manufacturing firms that allow us to estimate physical productivity. Results show that an input tariff reduction is associated with a larger increase in firm productivity in areas where better roads improve access to other intranational markets. Roads magnify pass-through of tariff reductions to imported input prices and also incentivize firms to exploit this cost advantage to enhance productivity. Road infrastructure hence complements trade liberalization.

Keywords: Input tariffs; Transport infrastructure; Roads; Firms; Productivity; Ethiopia (search for similar items in EconPapers)
JEL-codes: F14 O14 O18 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:153:y:2021:i:c:s0304387821000869

DOI: 10.1016/j.jdeveco.2021.102712

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