NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia

Marcela Eslava, John C. Haltiwanger, Adriana D. Kugler, Maurice Kugler

NBER Working Paper No. 14935
Issued in April 2009
NBER Program(s):   EFG   IO   ITI   PR

We use plant output and input prices to decompose the profit margin into four parts: productivity, demand shocks, mark-ups and input costs. We find that each of these market fundamentals are important in explaining plant exit. We then use variation across sectors in tariff changes after the Colombian trade reform to assess whether the impact of market fundamentals on plant exit changed with increased international competition. We find that greater international competition magnifies the impact of productivity, and other market fundamentals, on plant exit. A dynamic simulation that compares the distribution of productivity with and without the trade reform shows that improvements in market selection from trade reform help to weed out the least productive plants and increase average productivity. In addition, we find that trade liberalization increases productivity of incumbent plants and improves the allocation of activity within industries.

download in pdf format
   (288 K)

email paper

This paper is available as PDF (288 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14935

Published: “Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia” (co - authored with Marcela Eslava, Adriana Kugler and Maurice Kugler), Review of Economic Dynamics , 2013 .

Users who downloaded this paper also downloaded these:
Eslava, Haltiwanger, Kugler, and Kugler w11656 Factor Adjustments After Deregulation: Panel Evidence from Colombian Plants
Bartlesman, Haltiwanger, and Scarpetta w15490 Cross-Country Differences in Productivity: The Role of Allocation and Selection
Eslava, Haltiwanger, Kugler, and Kugler w10367 The Effect of Structural Reforms on Productivity and Profitability Enhancing Reallocation: Evidence from Colombia
Eaton, Eslava, Kugler, and Tybout w13531 Export Dynamics in Colombia: Firm-Level Evidence
Kugler and Kugler w13855 Labor Market Effects of Payroll Taxes in Developing Countries: Evidence from Colombia
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us