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Trade, Technology, and Productivity: A Study of Brazilian Manufacturers, 1986-1998

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  • Muendler, Marc-Andreas

Abstract

Brazil's trade liberalization between 1990 and 1993, and its partial re- versal in 1995, are used to study how reduced inward trade barriers affect productivity. The production function of Brazilian manufactur- ers is estimated at the ISIC3 two-digit level under various alternatives, including an extension of Olley and Pakes' (1996) procedure. Firm-level productivity is inferred and then related to trade. Findings suggest that (1) foreign competition pressures firms to raise productivity markedly, whereas (2) the use of foreign inputs plays a minor role for produc- tivity change. (3) The shutdown probability of inefficient firms rises with competition from abroad, thus contributing positively to aggre- gate productivity. Counterfactual simulations indicate that the compet- itive push (1) is an important source of immediate productivity change, while the elimination of inefficient firms (3) unfolds its impact slowly.

Suggested Citation

  • Muendler, Marc-Andreas, 2004. "Trade, Technology, and Productivity: A Study of Brazilian Manufacturers, 1986-1998," University of California at San Diego, Economics Working Paper Series qt6m96c2r7, Department of Economics, UC San Diego.
    • Handle: RePEc:cdl:ucsdec:qt6m96c2r7
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    More about this item

    Keywords

    Productivity;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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