Chinese vs. US trade in an emerging country: the impact of trade openness in Chile

Alexandra Sotiriou and Andrés Rodríguez-Pose

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper explores the effects of import competition on the manufacturing sector in Chile following the implementation of the country’s two largest Free Trade Agreements (FTA) (with the USA and China). Exploiting cross-industry variation in import exposure, we analyse the effects on manufacturing sales, employment and labour productivity at the finest level of industrial classification (4 digit ISIC level). We detect an overall negative effect of increased Chinese import penetration, owing to substitution effects from low and medium tech imports and a less pronounced effect from USA imports. By introducing interaction effects, we find that the levels of foreign ownership and the export intensity of the domestic industries reverse the negative effect due to the opportunities offered via participation in global value chains. An IV strategy is applied to address standard endogeneity concerns and confirm the robustness of our estimates.

Keywords: import penetration; free trade; manufacturing; Chile; China; USA (search for similar items in EconPapers)
JEL-codes: L81 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2021-12-02
New Economics Papers: this item is included in nep-cna, nep-int and nep-isf
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in The Journal of Development Studies, 2, December, 2021, 57(12), pp. 2095 - 2111. ISSN: 0022-0388

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http://eprints.lse.ac.uk/111033/ Open access version. (application/pdf)

Related works:
Journal Article: Chinese vs. US Trade in an Emerging Country: The Impact of Trade Openness in Chile (2021)
Working Paper: Chinese vs. US trade in an emerging country. The impact of trade openness in Chile (2021)
Working Paper: Chinese vs. US trade in an emerging country. The impact of trade openness in Chile (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:111033

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