Inter-industry Productivity Spillovers: An Analysis Using the 1989-1998 Brazilian Trade Liberalisation

Inter-industry Productivity Spillovers: An Analysis Using the 1989-1998 Brazilian Trade Liberalisation

A major obstacle in the estimation of inter-industry (vertical) productivity spillovers is the need of an exogenous productivity shock. In this article, I propose the use of trade policy changes as a large productivity shock, since the literature has found evidence that trade liberalisations increas...

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Bibliographic Details
Published in:The Journal of development studies Vol. 50; no. 9; pp. 1261 - 1274
Main Author: Paz, Lourenço S.
Format: Journal Article
Language:English
Published: Abingdon Routledge 01-09-2014
Taylor & Francis Ltd
Subjects:
Econometrics
Productivity
Productivity measurement
Trade liberalization
Trade policy
Brazil
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Summary:A major obstacle in the estimation of inter-industry (vertical) productivity spillovers is the need of an exogenous productivity shock. In this article, I propose the use of trade policy changes as a large productivity shock, since the literature has found evidence that trade liberalisations increase industry-level productivity. To do so, I develop a new empirical methodology using spatial econometrics, and apply it to the large economy-wide shock represented by the 1989-1998 Brazilian trade liberalisation. My results indicate the existence of positive and substantial upstream productivity spillovers. Nevertheless, no evidence of downstream productivity spillovers is found.
ISSN:0022-0388
1743-9140
DOI:10.1080/00220388.2013.866225