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Pavcnik (2002) Openness and Economic Performance Foreign competition leads to trimming of fat Big within plant productivity improvements in this sector Exit contributes to productivity gain Reshuf±ing of resources also accounts for large part of productivity gains Barriers to reshuf±ing (e.g. labor regulations) may constitute a problem Trade Liberalization and Poverty in India y dt = α + β tariff dt + γ t + δ d + ε dt tariff dt : tariff (workers employed in industry/registered workers) = dis- trict trade exposure y dt = district poverty measures captures the average effect of trade protection on regional outcomes – short to medium effect of trade liberalization in a speci²c district d captures district speci²c unobserved heterogeneity in the determinants
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Unformatted text preview: of poverty and inequality t captures macroeconomic shocks that affect the whole of India Effectively comparing districts which are more and less exposed to trade liberalization key result: districts with industrial structures that made them more ex-posed to tariff reduction experienced lower falls in rural poverty Urban poverty was unaffected Rural and urban inequality unaffected c Results robust – independent of the speci²cation used That is, districts which were more exposed to foreign trade experienced a slower reduction in poverty Strong focus on establishing exogeneity of tariffs and on measurement of Development Economics, LSE Summer School 2007 176...
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