TY  - JOUR
AU  - Acharya,Ram C.
AU  - Keller,Wolfgang
TI  - Estimating the Productivity Selection and Technology Spillover Effects of Imports
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14079
PY  - 2008
Y2  - June 2008
UR  - http://www.nber.org/papers/w14079
L1  - http://www.nber.org/papers/w14079.pdf
N1  - Author contact info:
Ram Acharya
Industry Canada
10-East, 235 Queen Street
Ottawa, Ontario
Canada  K1A 0H5
Tel: (613)954-6090
Fax: (613)991-1261
E-Mail: ram.acharya@ic.gc.ca

Wolfgang Keller
Department of Economics
University of Colorado-Boulder
Boulder, CO 80309-0256
Tel: 303/735 5507
Fax: 303/492 8960
E-Mail: Wolfgang.Keller@colorado.edu
AB  - Economists emphasize two channels through which import liberalization affects productivity, one operating between and the other within firms. According to the former, import competition triggers market share reallocations between domestic firms with different technological capabilities (selection). At the same time, imports can also improve firms' technologies through learning externalities (spillovers). We present evidence for a sample of industrialized countries over the period 1973 to 2002. First, in the long run, import liberalization lowers productivity in domestic industries through selection. This finding confirms the prediction of models with firm heterogeneity, including Melitz and Ottaviano (2008), in which unilateral liberalization lowers the profits of domestic relative to foreign exporters. Second, if imports involve advanced foreign technologies, liberalization also generates technological learning that can on net raise domestic productivity. Third, for short time horizons of up to three years, a surge in imports typically raises domestic productivity. Because the number of firms at home and abroad does not change much in the short-run, new competition from foreign firms has a pro-competitive effect. We also find that high entry barriers, especially regulation, slow down the process of market share reallocation between firms. Over- all, the results support models in which trade triggers both substantial selection and technological learning.
ER  -