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Trade Costs, Resource Reallocation and Productivity in Developing Countries
Author(s) -
Blyde Juan,
Iberti Gonzalo
Publication year - 2012
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12003
Subject(s) - productivity , economics , tariff , limiting , international economics , trade barrier , resource (disambiguation) , process (computing) , international trade , natural resource economics , macroeconomics , mechanical engineering , computer network , computer science , engineering , operating system
New trade models with heterogeneous firms suggest that international trade plays an important role in reallocating resources from low to high productivity plants. We use plant‐level data from Chile and measures of trade costs that include tariffs and freight rates to analyze the importance of this trade‐induced market selection process. We find that trade costs affect the reallocation process through the various channels predicted by the theory; however, the effects are approximately half of those reported for the US. We also find that while the tariff rate is responsible for preventing some of the reallocation, transportation costs have the most limiting role in terms of the number of channels affected.