Essays on international trade and plant behavior

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  • March 20, 2019
Creator
  • Braymen, Charles B.
    • Affiliation: College of Arts and Sciences, Department of Economics
Abstract
  • This work investigates the influences of international trade on plant-level behavior. While the traditional trade literature has focused on inter-industry reallocations driven by increased international economic relationships, the more recent availability of plant-level data has provided an opportunity to investigate the intra-industry reallocations that occur due to this foreign exposure. I examine the impact of international trade using plant-level data from the Chilean manufacturing sector during the years 1979-1996. I develop a theoretical methodology to examine the joint role of trade liberalization and macroeconomic shocks on manufacturing plant behavior. An econometrically calibrated simulation of plant behavior is embedded into a computable general equilibrium model to reconsider the impact of trade liberalization on the Chilean manufacturing sector. I find that, once the other macroeconomic influences are addressed, the impact of the trade liberalization on manufacturing plants was relatively minor. However, I also find that real exchange rate effects and the surplus of labor played a role in the sector's growth. I also examine the influence of international trade on plant-level behavior by creating quantified measure of output from each plant's materials usage, which is then used to estimate a production function in capital and labor. This allows a productivity term to be created that measures a plant's ability to create physical output from capital and labor. This productivity measure is used to provide evidence that foreign competition, in the form of both import penetration and pricing pressure, promotes short-term efficiency gains at the plant level. The relationship between exports, capital investment, and economic growth is also investigated. Empirical results indicate that plant-level export status positively influences a plant's investment behavior. The evidence concurs with previous findings that exporting behavior is closely linked to past establishment-level export status. These results support the notion that entrants to the export market face a substantial obstacle. However once this initial hurdle is overcome, manufacturing plants not only maintain their export orientation, but also expand their capital stocks and output at greater rates than their non-exporting counterparts.
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  • In Copyright
Advisor
  • Conway, Patrick J.
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  • Open access
Date uploaded
  • October 19, 2010

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