Trade and Market Selection: Evidence from Manufacturing Plants in Colombia

'Trade and Market Selection: Evidence from Manufacturing Plants in Colombia,' (with Marcela Eslava, John Haltiwanger, and Maurice Kugler), Review of Economic Dynamics, January (2013).

Posted: 13 Sep 2019 Last revised: 19 Sep 2019

See all articles by John Haltiwanger

John Haltiwanger

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Adriana D. Kugler

McCourt School of Public Policy ; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Maurice Kugler

IMPAQ International LLC

Marcela Eslava

University of the Andes (CEDE)

Date Written: January 1, 2013

Abstract

We examine the link between trade liberalization and aggregate productivity, with a focus on improved market selection resulting from a reduction in trade barriers and in the dispersion of these barriers across producers. Our analysis exploits tariff changes across sectors after the Colombian trade reform. An additional advantage of our analysis is that our TFP measure does not include demand and price effects. We find that reduced trade protection makes plant survival depend more closely on productivity. Using a dynamic simulation, we find that enhanced selection increases aggregate productivity substantially. Trade liberalization also increases productivity of incumbent plants and improves the allocation of activity. We find larger effects on allocative efficiency with our TFP measure than with a traditional measure including price effects.

Keywords: trade, market, Colombia, manufacturing plants

JEL Classification: F43, L25, O47

Suggested Citation

Haltiwanger, John C. and Kugler, Adriana Debora and Kugler, Maurice and Eslava, Marcela, Trade and Market Selection: Evidence from Manufacturing Plants in Colombia (January 1, 2013). 'Trade and Market Selection: Evidence from Manufacturing Plants in Colombia,' (with Marcela Eslava, John Haltiwanger, and Maurice Kugler), Review of Economic Dynamics, January (2013)., Available at SSRN: https://ssrn.com/abstract=3448318

John C. Haltiwanger

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3504 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Adriana Debora Kugler (Contact Author)

McCourt School of Public Policy ( email )

3700 O ST NW
311 Old North
Washington, DC 20057
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Maurice Kugler

IMPAQ International LLC ( email )

1325 G Street, NW
Suite 900
Washington, DC 20005
United States

Marcela Eslava

University of the Andes (CEDE) ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

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