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Trade liberalization and inter-industry productivity spillovers: an analysis of the 1989-1998 Brazilian trade liberalization episode

Lourenco Paz

MPRA Paper from University Library of Munich, Germany

Abstract: The desire to increase manufacturing productivity has been a commonly cited goal of the trade liberalization episodes that have swept several developing countries since the 1980s. The literature has found evidence supporting such an increase in productivity. However, this paper finds that the methodology used in the literature ignores inter-industry productivity spillovers and suggests that this omission biases estimates of the impact of import tariff reduction on industry-level productivity. The findings from a case study of the Brazilian trade liberalization episode (1989-1998) indicate that the literature has overestimated the direct effect of trade liberalization by at least 25%, and that inter-industry productivity spillovers exist, are positive, and account for 70% of the increase in productivity that results from a reduction in import tariffs.

Keywords: productivity; trade liberalization; Brazil; spillovers (search for similar items in EconPapers)
JEL-codes: F1 L6 O3 (search for similar items in EconPapers)
Date: 2012-02-15
New Economics Papers: this item is included in nep-eff and nep-int
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https://mpra.ub.uni-muenchen.de/45667/1/MPRA_paper_45667.pdf revised version (application/pdf)

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