International Trade and U.S. Productivity: Technical Paper 2003-05

Juann Hung, Matt Salomon and Stacia Sowerby

No 14567, Working Papers from Congressional Budget Office

Abstract: This paper examines the effect of international trade on U.S. productivity. We argue that trade can affect domestic productivity through economies-of-scale effects, competition effects, reallocation effects, and spillover effects. We then estimate the net impact of these effects. The results of both panel and time-series regressions of manufacturing data indicate that (1) a decrease in the import price has a positive competition effect on manufacturing productivity growth after one to two years, and this impact is bigger when import penetration is bigger; and (2) exporting

Date: 2003-06-02
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