Improved Access to Foreign Markets Raises Plant-Level Productivity… for Some Plants^*

2010/08/01 by Alla Lileeva, А.Г. Лилеева, Daniel Trefler · 12 citations
Economics, Econometrics and Finance · Agricultural and Biological Sciences · #Global trade and economics #Agricultural Economics and Policy #Economics of Agriculture and Food Markets

paper · doi:10.1162/qjec.2010.125.3.1051

Abstract

Market size matters for innovation and hence for productivity. Improved access to foreign markets will thus encourage firms to simultaneously export and invest in raising productivity. We examine this insight using the responses of Canadian plants to the elimination of U.S. tariffs. Unique “plant-specific” tariff cuts serve as an instrument for changes in exporting. We find that Canadian plants that were induced by the tariff cuts to start exporting or to export more (a) increased their labor productivity, (b) engaged in more product innovation, and (c) had higher adoption rates for advanced manufacturing technologies. Further, these responses were heterogeneous.

Citations

• Do exports generate higher productivity? Evidence from Slovenia
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• The central role of the propensity score in observational studies for causal effects

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