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Inter-industry Productivity Spillovers: An Analysis Using the 1989-1998 Brazilian Trade Liberalisation

Lourenco Paz

Journal of Development Studies, 2014, vol. 50, issue 9, 1261-1274

Abstract: A major obstacle in the estimation of inter-industry (vertical) productivity spillovers is the need of an exogenous productivity shock. In this article, I propose the use of trade policy changes as a large productivity shock, since the literature has found evidence that trade liberalisations increase industry-level productivity. To do so, I develop a new empirical methodology using spatial econometrics, and apply it to the large economy-wide shock represented by the 1989-1998 Brazilian trade liberalisation. My results indicate the existence of positive and substantial upstream productivity spillovers. Nevertheless, no evidence of downstream productivity spillovers is found.

Date: 2014
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DOI: 10.1080/00220388.2013.866225

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