Trade costs, resource reallocation and productivity in developing countries

Juan Blyde and Gonzalo Iberti

MPRA Paper from University Library of Munich, Germany

Abstract: An increasing body of evidence indicates that an important share of aggregate productivity growth, in both developed and developing countries, arises from the reallocation of resources across plants of different productivity levels. New trade models with heterogeneous firms (Bernard et al., 2003; Melitz, 2003) suggest that international trade plays an important role in this reallocative process. Focusing on a developing country, Chile, we use explicit measures of trade costs to explore the existence of the channels suggested by these new trade models. We provide new key findings for developing countries: first, trade costs affect the reallocative process by protecting inefficient producers, lowering their likelihood to exit, and also by limiting the expansion of efficient plants, lowering their likelihood to export. Second, the reallocative impacts of trade arise not only from tariff barriers but also from transport costs.

Keywords: Trade costs; productivity; resource reallocation (search for similar items in EconPapers)
JEL-codes: F13 F14 L1 (search for similar items in EconPapers)
Date: 2010-02
New Economics Papers: this item is included in nep-dev, nep-eff and nep-int
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Trade Costs, Resource Reallocation and Productivity in Developing Countries (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21318

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