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Pavcnik (2002) Openness and Economic Performance Need to more directly identity impact of trade on the evolution of a plants productivity Run regression of the form: pr it = α 0 + 1 ( time )+ 2 ( trade )+ 3 ( trade time )+ 4 Z it + v it time is a vector of year indicators trade captures trade orientation of the plant Z it is a vector of plant characteristics Using a difference in difference framework No data pre-1979 so cannot look before trade policy reform Liberalized trade directly effects plants in the import competing and ex- port oriented sectors but not in the non-traded sector Want to look at whether trade liberalization makes plants more produc- tive, if so, expect coefFcient 3 to be positive Findings 1. Exiting plants less productive than those that remaining – they were
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Unformatted text preview: earlier shielded by trade protection 2. Plant in the import competing sector were becoming more productive over the period 3. These are within plant productivity effects 4. They experience productivity gains of between 3 and 10% 5. Exporters of exportable products did not experience productivity im-provements attributable to liberalized trade these Frms may already have been fully competitive Summing Up Consistent estimates of production functions Liberalised trade enhances plant productivity Productivity of producers in the import competing sectors improved by between 3 and 10% more than productivity in the non-traded sectors Development Economics, LSE Summer School 2007 173...
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