Trade Liberalization and Investment : Firm-level Evidence from Mexico

Plant-level panel data from Mexico's Annual Industrial Survey is employed to evaluate the impact of reductions in tariffs and import license coverage on final goods, as well as intermediates, on firms'investment decisions. Using data from 1984 to 1990, a period during which a large scale t...

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Bibliographic Details
Main Authors:	Kandilov, Ivan T., Leblebicioğlu, Aslı
Format:	Journal Article
Language:	en_US
Published:	Oxford University Press on behalf of the World Bank 2013
Subjects:	Bond; cash flow; developing countries; domestic market; economic efficiency; emerging economies; exporters; foreign debt; foreign exchange; foreign market; import costs; International Bank; international trade; investment choice; investment decisions; market efficiency; oil boom; Trade Liberalization; trade protection; trading
Online Access:	http://hdl.handle.net/10986/16354

id	okr-10986-16354
recordtype	oai_dc
spelling	okr-10986-163542021-04-23T14:03:28Z Trade Liberalization and Investment : Firm-level Evidence from Mexico Kandilov, Ivan T. Leblebicioğlu, Aslı Bond; cash flow; developing countries; domestic market; economic efficiency; emerging economies; exporters; foreign debt; foreign exchange; foreign market; import costs; International Bank; international trade; investment choice; investment decisions; market efficiency; oil boom; Trade Liberalization; trade protection; trading Plant-level panel data from Mexico's Annual Industrial Survey is employed to evaluate the impact of reductions in tariffs and import license coverage on final goods, as well as intermediates, on firms'investment decisions. Using data from 1984 to 1990, a period during which a large scale trade liberalization occurred, a dynamic investment equation is estimated using the system-GMM estimator developed by Arellano and Bover (1995) and Blundell and Bond (1998). Consistent with theory, the empirical analyses show that a reduction in import protection on final goods leads to lower plant-level investment, whereas reductions in tariffs and import license coverage on intermediate inputs result in higher investment. Also, firms with larger import costs experience a larger increase in investment following a reduction in import protection. On the other hand, higher markup firms lower investment more aggressively following reductions in tariffs and import license coverage on final goods. 2013-12-04T18:14:09Z 2013-12-04T18:14:09Z 2012-06-01 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/16354 en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Oxford University Press on behalf of the World Bank Journal Article Mexico
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	Bond; cash flow; developing countries; domestic market; economic efficiency; emerging economies; exporters; foreign debt; foreign exchange; foreign market; import costs; International Bank; international trade; investment choice; investment decisions; market efficiency; oil boom; Trade Liberalization; trade protection; trading
spellingShingle	Bond; cash flow; developing countries; domestic market; economic efficiency; emerging economies; exporters; foreign debt; foreign exchange; foreign market; import costs; International Bank; international trade; investment choice; investment decisions; market efficiency; oil boom; Trade Liberalization; trade protection; trading Kandilov, Ivan T. Leblebicioğlu, Aslı Trade Liberalization and Investment : Firm-level Evidence from Mexico
geographic_facet	Mexico
description	Plant-level panel data from Mexico's Annual Industrial Survey is employed to evaluate the impact of reductions in tariffs and import license coverage on final goods, as well as intermediates, on firms'investment decisions. Using data from 1984 to 1990, a period during which a large scale trade liberalization occurred, a dynamic investment equation is estimated using the system-GMM estimator developed by Arellano and Bover (1995) and Blundell and Bond (1998). Consistent with theory, the empirical analyses show that a reduction in import protection on final goods leads to lower plant-level investment, whereas reductions in tariffs and import license coverage on intermediate inputs result in higher investment. Also, firms with larger import costs experience a larger increase in investment following a reduction in import protection. On the other hand, higher markup firms lower investment more aggressively following reductions in tariffs and import license coverage on final goods.
format	Journal Article
author	Kandilov, Ivan T. Leblebicioğlu, Aslı
author_facet	Kandilov, Ivan T. Leblebicioğlu, Aslı
author_sort	Kandilov, Ivan T.
title	Trade Liberalization and Investment : Firm-level Evidence from Mexico
title_short	Trade Liberalization and Investment : Firm-level Evidence from Mexico
title_full	Trade Liberalization and Investment : Firm-level Evidence from Mexico
title_fullStr	Trade Liberalization and Investment : Firm-level Evidence from Mexico
title_full_unstemmed	Trade Liberalization and Investment : Firm-level Evidence from Mexico
title_sort	trade liberalization and investment : firm-level evidence from mexico
publisher	Oxford University Press on behalf of the World Bank
publishDate	2013
url	http://hdl.handle.net/10986/16354
_version_	1764432947512868864

Trade Liberalization and Investment : Firm-level Evidence from Mexico

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