New evidence on trade liberalization and productivity growth

Although the subject of a large number of studies, the debate on the links between trade reform and productivity growth is still unresolved and most studies at the micro level have not been able to establish a relationship between the two phenomena. Brazil provides a natural experiment to study this issue that is seldom available: it was one of the closest economies in the world until 1988, when trade reform was launched, and intra-industry data are available on an annual basis before, during and after liberalization. Using a panel of industry sectors this paper tests and measures the impact of trade reform on productivity growth. Results confirm the association between the former and the latter and show that the magnitude of the impact of tariff reduction on the growth rates of TFP and output per worker was substantial. Our data reveal large and widespread productivity improvement, so that the estimations in this paper are an indication that liberalization had an important effect on industrial performance in the country. Cross-sectional differences in protection are also investigated.

Rent-sharing in Brazil: using trade liberalization as a natural experiment

This paper examines the extent of rent-sharing in Brazil, between 1988 and 1995, combining two different data sets: annual industrial surveys (pIA) and annual household surveys (PNADs). The aim is to use the trade liberalization policies that took place in Brazil in the early 1990s as a "natural experiment" to examine the impact ofproduct market rents on wages. We first estimate inter-industry wage differentials in Brazil, using the household surveys, afier controlling for various observable workers' characteristics. In a reduced form fixed effects equation, these controlled inter-industry differentials are seen to depend on the industries' rate of effective tariff. We also find that LSDV estimates of the effect of value-added per worker (computed using the industrial surveys) on the wage differentials are positive, but somewhat small. However, we find that instrumenting the valued-added with the effective tariffs more than doubles the estimated rent-sharing coefficient. The paper concludes that rent-sharing is prevalent in the Brazilian manufacturing sector, and this mechanism transferred part of the productivity gains due to trade liberalization to manufacturing workers in the form ofhigher (controlled) wage premium.

Trade liberalization in the Western Hemisphere

Foreword of Enrique V. Iglesias and Gert Rosenthal

Agricultural incentives, growth and poverty in Latin America and the Caribbean: cross-country evidence for the period 1960-2005. Did trade liberalization increase the incomes of the poorest?

Includes bibliography

The competitiveness of agrifoods in Central American and Caribbean countries in the context of trade liberalization

Includes bibliography

Trade liberalization and industrial pollution in Brazil

Includes bibliography

Industrial restructuring, trade liberalization and the role of the State in Central America

Includes bibliography

Trade liberalization in Latin America

Includes bibliography

Has trade liberalization created pollution havens in Latin America?

Includes bibliography

Trade liberalization and economic growth in Central America

Includes bibliography

Small economies' tariff and subsidy policies in the face of trade liberalization in the Americas

Includes bibliography

Report of the workshop in Caribbean small and medium-sized enterprises and trade liberalization: challenges of clusters and network initiatives

Includes bibliography