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Trade Reforms in a Global Competition Model: the Case of Chile

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  • Irarrazabal, Alfonso A.
  • Opromolla, Luca David

Abstract

We use a global competition model of international trade with heterogeneous firms to evaluate the impact of trade reforms that occurred in Chile at the end of the 70s. We compare the predictions of the calibrated model in terms of productivity, plant turnover, job and trade flows with what occurred in reality using a comprehensive plant-level panel dataset for the manufacturing sector. The model explains several effects of liberalization reforms on industry performance. In contrast to the previous studies we use a general equilibrium approach that allows fully quantifying and identifying the trade liberalization effects on the tradeable and nontradeable sectors. We proceed by performing a counterfactual experiment aimed at exploring the impact of preferential trade agreements negotiated by Chile in recent years with the EU and NAFTA.

Suggested Citation

  • Irarrazabal, Alfonso A. & Opromolla, Luca David, 2007. "Trade Reforms in a Global Competition Model: the Case of Chile," Conference papers 331651, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331651
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    Cited by:

    1. Breinlich, Holger & Cuñat, Alejandro, 2010. "Trade liberalization and heterogeneous firm models: an evaluation using the Canada - US Free Trade Agreement," LSE Research Online Documents on Economics 28725, London School of Economics and Political Science, LSE Library.
    2. Braymen, Charles B., 2011. "Sectoral structure, heterogeneous plants, and international trade," Economic Modelling, Elsevier, vol. 28(4), pages 1967-1976, July.
    3. Bergoeing, Raphael & Micco, Alejandro & Repetto, Andrea, 2011. "Dissecting the Chilean export boom," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    4. Impullitti, Giammario & Irarrazabal, Alfonso A. & Opromolla, Luca David, 2013. "A theory of entry into and exit from export markets," Journal of International Economics, Elsevier, vol. 90(1), pages 75-90.
    5. Raúl O’Ryan & Mario Niklitschek & Edwin Niklitschek & Nicolo Gligo & Andres Ulloa, 2010. "Trade Liberalization, Rural Poverty and the Environment: A Case Study of the Forest and Salmon Sectors in Chile," Chapters, in: Jonathan A. Cook & Owen Cylke & Donald F. Larson & John D. Nash & Pamela Stedman-Edwards (ed.), Vulnerable Places, Vulnerable People, chapter 2, Edward Elgar Publishing.
    6. Maria Bas & Ivan Ledezma, 2007. "Market Access and the Evolution of within Plant Productivity in Chile," CESifo Working Paper Series 2077, CESifo.

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    More about this item

    Keywords

    International Relations/Trade; Productivity Analysis;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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