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Global Productivity Distribution and Trade in Processed Food Industries

Author

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  • Ruan, Jun
  • Gopinath, Munisamy

Abstract

The emerging literature on firm heterogeneity suggests that trade liberalization raises industry average productivity by forcing its least productive firms to exit. Consequently, resources and market shares are reallocated toward the industry¡¯s more productive firms. We extend firm-heterogeneity models of international trade to a cross-country setting to investigate the effects of trade liberalization on global productivity distribution, and resource and market share reallocation in processed food industries. We approximate the global productivity distribution using a kernel density estimator in 5 processed food industries for every period during 1993-2000. We find that the global productivity distribution shifts to the right with liberalized international trade. Moreover, countries with faster productivity growth than the global average benefit from trade liberalization by acquiring a larger share of global markets and resources.

Suggested Citation

  • Ruan, Jun & Gopinath, Munisamy, 2007. "Global Productivity Distribution and Trade in Processed Food Industries," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9807, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea07:9807
    DOI: 10.22004/ag.econ.9807
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