The Elusive Productivity Effect of Trade Liberalization in the Manufacturing Industries of Emerging Economies

Berhanu Abegaz and Arnab Basu

No 94717, Discussion Papers from University of Bonn, Center for Development Research (ZEF)

Abstract: Using a model that admits variable returns and imperfect competition, we investigate the impact on total factor productivity of trade liberalization in six emerging economies. Regressions based on panel data for 28 three-digit manufacturing industries show that productivity growth is insensitive to tariff reduction. These results are at variance with country-specific studies which, using firm-level data, generally find a positive association between liberalization and productivity growth. While aggregation effects may matter, our results can also be explained thusly: significant productivity gains by latecomers via technological assimilation do take time and require appropriate sequencing of reforms of trade and industrial policies.

Keywords: Production; Economics (search for similar items in EconPapers)
Pages: 30
Date: 2010-10
New Economics Papers: this item is included in nep-eff
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Citations: View citations in EconPapers (1)

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Journal Article: The Elusive Productivity Effect of Trade Liberalization in the Manufacturing Industries of Emerging Economies (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ubzefd:94717

DOI: 10.22004/ag.econ.94717

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