Trade Policy Reform and Productivity: The Colombian Manufacturing Sector from 1977 to 2001 (original) (raw)

Productivity dynamics of the Colombian manufacturing sector

Banco Interamericano de Desarrollo, …, 2003

This paper analyzes the effects on Colombian manufacturing productivity of tax and foreign trade policy changes during the 1990s. Our results indicate that between 1977 and 1999, aggregate manufacturing productivity largely stagnates and even declines in some of the larger industries. There is little entry and exit of plants or reallocation of labor. The productivity stagnation can be explained by

TRADE AND LABOR MARKETS: EVIDENCE FROM THE COLOMBIAN TRADE LIBERALIZATION PROCESS

2006

The objective of this paper is to measure the impact of trade on the sectoral labor markets. Using the Colombian National Household Survey and comparable trade-related data, we study how changes in trade policy affect the sectoral demands for labor, as measured by the change in wages and employment. We develop a structural model and estimate its reduced form specification to determine an elasticity between measures of sectoral tariffs and labor demand, correcting for tariff endogeneity. The data used covers the period of 1984 through 1999. This allows us to take advantage of the natural experiment represented by the Colombian trade liberalization process of the early nineties. The results suggest that sector tariff levels over the period are positively correlated with their employment levels, but only for tradable sectors. In the case of wages, there is no evidence that they were affected by the trade reform.

Trade reforms and market selection: evidence from manufacturing plants in Colombia

2009

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. (J. Haltiwanger), ak659@georgetown.edu (A. Kugler), maurice.kugler@gmail.com (M. Kugler). 1 Poor institutions-including trade barriers that are differential across producers-generate misallocation by introducing idiosyncratic distortions to profitability (Banerjee and Duflo, 2005; Bartelsman et al., forthcoming; Hsieh and Klenow, 2009; and Restuccia and Rogerson, 2008). Survival and growth may then depend on idiosyncratic policies, such as favorable trade regulations, rather than on efficiency. Yong (2011). 3 The other, theory-motivated, market fundamentals we have in mind are demand shocks, demand elasticities, and input costs. These are controlled for in our empirical analysis. 4 Building on a theoretical framework and data on products at the plant level, De Loecker (2011) corrects for unobserved prices in estimating the impact of trade on within-plant productivity.

Does trade liberalization lead to productivity increases? A case study of Bolivian manufacturing

Journal of International Development, 1995

The impact of a more open trade regime on productivity is often cited as a major argument for trade liberalization. The paper reviews the theoretical arguments linking trade liberalization and productivity growth and the existing empirical evidence. It then provides an analysis of the Bolivian experience since the mid-l980s, paying particular attention to three main mechanisms through which liberalization might lead to increased productivity. It concludes that there is no evidence that the Bolivian trade reforms have led to improved productivity performance.

“Researching the Trade Productivity Link: Evidence from Uruguay” Preliminary Draft

2004

Development economists argue that trade protection reduces industrial sector efficiency, mainly through the distortion in relative prices, increased market power, x-inefficiency and inefficient scales of production. Nevertheless there is no convincing evidence on the link between trade reforms and improvement in economic performance. This work examines the case of Uruguay, an economy that introduced major trade reforms initially in the mid-1970s with a continuous reduction in trade barriers in the 1980s. In 1991, this process was deepened with the signature of the Asuncion Treaty aimed to the creation of the Southern Common Market. Thus the objective of this work is to analyse the impact of trade liberalisation –namely the increase in liberalisation as a result of the creation of the MERCOSUR -on economic performance for the Uruguayan case, in the period 1990-1994. To do so we estimate returns to scale for 37 branches at a 4-digit ISIC code level, as well as efficiency and dispersio...

Productivity growth in Latin American manufacturing: what role for international trade intensities?

2011

This paper analyzes the relationship between the intensity of international trade flows and labor productivity for 28 industries in the five main economies in the region (Argentina, Brazil, Chile, Colombia and Mexico)using the Arellano-Bond generalized method of moments (GMM)estimator. The results show that international trade flows contributed through various channels to labor productivity growth in the period 1990 to 2008.

Colombian Market Liberalisation and Plant Level Production Functions

2008

We find a sharp negative productivity shock across the entire manufacturing sector that coincides with market liberalisation, followed by a slow recovery. This compares dramatically with growing productivity in the ISI period. We have evidence supporting the allocative efficiency gains found in other studies as production shifts within and across sectors. However, these gains do not offset the within plant declines despite growing GDP and increases in capital stock. Finally we find clear evidence against a monotonic relationship between productivity and trade intensity. ___________________________________________________________________________

Sectorial adjustment costs induced by the Colombian pattern of international trade, 1991-2015

The objective of the paper is to analyze the adjustment costs induced by Colombia’s international trade pattern for the period 1991-2015. The methodology focuses on the calculation of marginal intra-industry trade indexes, the adjustment cost index and the use of the graphical tool known as the International Adjustment Cost Space. The data come from the Sistema Armonizado (Harmonized System) by the Departamento Administrativo Nacional de Estadística (National Administrative Department of Statistics), which reports the International Standard Industrial Classification at 4 digits. The main results are: (1) Economic sectors such as Substances and chemical products, plastic and rubber products, metal products, textiles and clothing, and wood products show lower adjustment costs, which is beneficial for Colombia because these are sectors with significant participation in the generation of employment and added value. (2) Trade in these sectors occupies important positions with countries with whom Colombia shares similar relative factor endowments such as Chile, Mexico, Brazil, Peru and Ecuador. Thus, increased intra-industry trade may lead to lower adjustment pressures on domestic factors of production.