Size rationalization and trade exposure in developing countries

Mark Roberts and James Tybout

No 594, Policy Research Working Paper Series from The World Bank

Abstract: Given the lack of direct evidence regarding industrial adjustment in response to trade liberalization, this paper tackles some very basic questions. Specifically, in LDCs, how is trade orientation correlated with the size distribution of plants and with plant-level labor productivity? It begins with a simple model that summarizes some effects of trade exposure on producer size and productive efficiency that have been stressed in the recent analytical and simulation literature. It then examines annual plant-level data from Chile and Colombia to determine whether these effects can be confirmed. The empirical results indicate that, over the long run, higher trade exposure is correlated with smaller plant sizes, controlling for industry and country effects. However, the mix of high versus low productivity plants is not strongly associated with trade exposure. Both of these findings cast doubt on the mechanisms linking trade, plant size, and productivity in a number of recent analytical and simulation studies.

Keywords: Economic Theory&Research; Environmental Economics&Policies; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Trade Policy; Science Education (search for similar items in EconPapers)
Date: 1991-02-28
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Citations: View citations in EconPapers (38)

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Related works:
Chapter: Size Rationalization and Trade Exposure in Developing Countries (1991)
Working Paper: SIZE RATIONALIZATION AND TRADE EXPOSURE IN DEVELOPING COUNTRIES (1990)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:594

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