Trade Liberalization, Firm Performance, and Labor Market Outcomes in the Developing World : What Can We Learn from Micro-Level Data?
reviews the micro-level evidence on the effects of trade and investment liberalization in the developing world. He focuses, in particular, on the effects of the 1991 trade reform in India since it provides an excellent controlled experiment in whic...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2003/05/2378823/trade-liberalization-firm-performance-labor-market-outcomes-developing-world-can-learn-micro-level-data http://hdl.handle.net/10986/18220 |
| Summary: | reviews the micro-level evidence on the
effects of trade and investment liberalization in the
developing world. He focuses, in particular, on the effects
of the 1991 trade reform in India since it provides an
excellent controlled experiment in which the effects of a
drastic trade regime change can be measured. His main
findings are: 1) There is evidence of trade-induced
productivity gains (in this respect, however, India is an
exception. 2) These gains mainly stem from intra-industry
reallocation of resources among firms with different
productivity levels. 3) The gains are larger in
import-competing sectors. 4) There is no evidence of
significant scale efficiency gains. Unilateral trade
liberalization is often associated with a reduced scale
efficiency. 5) There is evidence of a pro-competitive effect
of trade liberalization. 6) There is no evidence either of
learning-by-exporting effects or of beneficial spillover
effects from foreign-owned to local firms active in the same
sectors. 7) There is evidence, however, of positive vertical
spillovers from foreign direct investment. 8) There is
evidence of skill upgrading induced either by technology
imports or by trade-induced reallocations of market shares
in favor of plants with higher skill-intensity. 9) There is
no evidence of trade-induced increases in labor demand
elasticities. But direct evidence suggests that trade
exposure raises wage volatility. 10) There is no evidence of
substantial employment contraction in import-competing sectors. |
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