Improved Access to Foreign Markets Raises Plant-Level Productivity… for Some Plants *
Abstract
Market size matters for innovation and hence for productivity. Improved access to foreign markets will thus encourage firms to simultaneously export and invest in raising productivity. We examine this insight using the responses of Canadian plants to the elimination of U.S. tariffs. Unique “plant-specific” tariff cuts serve as an instrument for changes in exporting. We find that Canadian plants that were induced by the tariff cuts to start exporting or to export more (a) increased their labor productivity, (b) engaged in more product innovation, and (c) had higher adoption rates for advanced manufacturing technologies. Further, these responses were heterogeneous.
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Lileeva and Trefler (2010) found US tariff reductions raised productivity only in the least productive new Canadian exporters, contrasting with Argentina where Brazil's tariff cuts induced technology upgrading mostly in the third quartile and among old as well as new exporters.
“Their finding that the reduction in US tariffs induced productivity increases in only the least productive new entrants in the export market for the case of Canada contrasts with the findings for Argentina where the reduction in Brazil's tariffs induced technology upgrading mostly in the third quartile of the firm-size distribution and not only in new but also in old exporters.”
From Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms (2011) · cites this paper as Alla Lileeva and Trefler (2010)
Cites
Identification and estimation of local average treatment effects
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The Long and Short of the Canada-U.S. Free Trade Agreement
Trefler, D. (2004) · American Economic Review · doi:10.1257/0002828042002633 · Cited by 1,071 · see citing works
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Bustos, P. (2011) · American Economic Review · doi:10.1257/aer.101.1.304 · Cited by 1,552 · see citing works
Intermediate input imports and innovations: Evidence from Chinese firms' patent filings
Liu, Q., & Qiu, L. D. (2016) · Journal of International Economics · doi:10.1016/j.jinteco.2016.09.009 · Cited by 499 · see citing works
Can E-Filing Reduce Tax Compliance Costs in Developing Countries?
Yilmaz, F., & Coolidge, J. (2013) · doi:10.1596/1813-9450-6647 · Cited by 49 · see citing works
- Authors
- Lileeva, A., & Trefler, D.
- Affiliations
- Statistics Canada (CA)
- Canadian Institute for Advanced Research (CA)
- ORCID
- Trefler, Daniel
- Venue
- Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 2010-08
- Volume
- 125
- Issue
- 3
- Pages
- 1051-1099
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W2166164058
- Cited by
- 879
- References
- 2
- Citations by year
- 2026: 49 · 2025: 51 · 2024: 54 · 2023: 72 · 2022: 56 · 2021: 50 · 2020: 42 · 2019: 47 · 2018: 78 · 2017: 44 · 2016: 62 · 2015: 56 · 2014: 76 · 2013: 45 · 2012: 41
- FWCI
- 87.73
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The Quarterly Journal of Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
- Social Sciences › Business, Management and Accounting › Strategy and Management › International Business and FDI
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic and Technological Innovation
- Keywords
- foreign market access, tariff reduction, plant-level productivity, labor productivity, product innovation, exporting, manufacturing technology adoption, Canadian firms, US tariffs, market size
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