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The Impact of Trade Liberalization on Industrial Productivity

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  • Paul S. Segerstrom
  • Yoichi Sugita

Abstract

This paper calls into question the currently most influential model of international trade. An empirical finding by Trefler (2004, AER) and others that industrial productivity increases more strongly in liberalized industries than in non-liberalized industries has been widely accepted as evidence for the Melitz (2003, Econometrica) model. We show that a multi-industry version of the Melitz model does not predict this relationship. Instead, it predicts the opposite relationship that industrial productivity increases more strongly in non-liberalized industries than in liberalized industries.

Suggested Citation

  • Paul S. Segerstrom & Yoichi Sugita, 2013. "The Impact of Trade Liberalization on Industrial Productivity," CESifo Working Paper Series 4365, CESifo.
    • Handle: RePEc:ces:ceswps:_4365
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    Citations

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    Cited by:

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    3. Fernandes, Ana M. & Mattoo, Aaditya & Nguyen, Huy & Schiffbauer, Marc, 2019. "The internet and Chinese exports in the pre-ali baba era," Journal of Development Economics, Elsevier, vol. 138(C), pages 57-76.
    4. Bawa, Siraj, 2017. "Corporate Taxation in the Open Economy without Pareto," MPRA Paper 80857, University Library of Munich, Germany, revised Aug 2017.
    5. Reto Foellmi & Stefan Legge & Alexa Tiemann, 2021. "Innovation and trade in the presence of credit constraints," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(3), pages 1168-1205, November.
    6. Paul S. Segerstrom & Ignat Stepanok, 2018. "Learning How To Export," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(1), pages 63-92, January.
    7. Hsieh, Chang-Tai & Li, Nicholas & Ossa, Ralph & Yang, Mu-Jeung, 2020. "Accounting for the new gains from trade liberalization," Journal of International Economics, Elsevier, vol. 127(C).
    8. Yongjin Wang & Guofeng Zhang, 2022. "The elusive impacts of tariff reduction on firm selection," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 30(4), pages 753-772, October.
    9. Hangtian Xu & Yiming Zhou, 2023. "Inter-industry trade and heterogeneous firms: country size matters," The Japanese Economic Review, Springer, vol. 74(1), pages 57-81, January.
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    11. Chang-Tai Hsieh & Nicholas Li & Ralph Ossa & Mu-Jeung Yang, 2016. "Gains from Trade with Flexible Extensive Margin Adjustment," NBER Working Papers 22069, National Bureau of Economic Research, Inc.
    12. Kishi, Keiichi & Okada, Keisuke, 2021. "The impact of trade liberalization on productivity distribution under the presence of technology diffusion and innovation," Journal of International Economics, Elsevier, vol. 128(C).

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    More about this item

    Keywords

    trade liberalization; firm heterogeneity; industrial productivity;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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