Trade liberalization and the dimensions of efficiency change in Mexican manufacturing industries

James Tybout, M. Daniel Westbrook

Research output: Contribution to journalArticle

197 Citations (Scopus)

Abstract

Did Mexico's recent trade liberalization generate productivity gains? We find that average costs fell in most industries, with tradeable goods producers registering the largest reductions. Among importables, these cost reductions trace partly to improvements in relative productivity. Among exportables, they are due to favorable changes in relative prices, probably because imported intermediate goods became cheaper. Gains due to scale economy exploitation were minor and were not correlated with increases in foreign competition. Hence the results cast some doubt on simulation studies of trade liberalization that stress scale effects as a major source of efficiency gain.

Original languageEnglish (US)
Pages (from-to)53-78
Number of pages26
JournalJournal of International Economics
Volume39
Issue number1-2
DOIs
StatePublished - Jan 1 1995

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Trade liberalization
Manufacturing industries
Productivity
Efficiency change
Relative prices
Intermediate goods
Foreign competition
Scale effect
Average cost
Industry
Efficiency gains
Scale economies
Exploitation
Simulation study
Mexico

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Cite this

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Trade liberalization and the dimensions of efficiency change in Mexican manufacturing industries. / Tybout, James; Westbrook, M. Daniel.

In: Journal of International Economics, Vol. 39, No. 1-2, 01.01.1995, p. 53-78.

Research output: Contribution to journalArticle

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