The NAFTA Tide: Lifting the Larger and Better Boats

50 Pages Posted: 14 Jan 2008

See all articles by Ángel Calderón-Madrid

Ángel Calderón-Madrid

El Colegio de Mexico

Alexandru Voicu

City University of New York (CUNY) - College of Staten Island; IZA Institute of Labor Economics

Date Written: December 2007

Abstract

We use panel data on Mexican manufacturing plants to study the connection between plants' responses to changes in the economic environment and their contributions to aggregate productivity growth in the period following the implementation of the North American Trade Agreement (NAFTA). In all industries, an overwhelming share of aggregate productivity growth is accounted for by a small number of plants which were larger and more productive before the implementation of NAFTA and expanded and became more productive following the implementation of NAFTA. Plants that exported before NAFTA and export continuously through 2000 and some of the new exporters are more likely to be among the top-performing plants. Exporting activity and performance of plants with similar exporting experience, however, display remarkable heterogeneity. This heterogeneity implies that trade liberalization provided growth opportunity to larger and more productive plants irrespective of their export status and provides an explanation for the lackluster average productivity performance of exporting plants.

Keywords: NAFTA, trade liberalization, productivity, heterogeneity of plant-level performance

JEL Classification: C13, D24, F13, O47, O54

Suggested Citation

Calderón-Madrid, Ángel and Voicu, Alexandru, The NAFTA Tide: Lifting the Larger and Better Boats (December 2007). IZA Discussion Paper No. 3207, Available at SSRN: https://ssrn.com/abstract=1081643

Ángel Calderón-Madrid

El Colegio de Mexico ( email )

Mexico DF 01000
Mexico

Alexandru Voicu (Contact Author)

City University of New York (CUNY) - College of Staten Island ( email )

NY
United States
718-982-2899 (Phone)

HOME PAGE: http://www.library.csi.cuny.edu/~pep/voicu.htm

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany
+49 228 38 94 527 (Phone)
+49 228 38 94 510 (Fax)

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