Abstract

ABSTRACT:

We study the effect of a trade-induced competitive shock, defined as rising import competition from China, on Chilean manufacturing plants. For identification, we exploit the fact that in 1995–2006, Chinese import penetration increased sharply in Chile, but this expansion varied widely across manufacturing industries. We use Chinese export growth in high-income industry-country pairs as an instrument for Chinese import penetration. Our results suggest that plants in more exposed industries exhibit relative declines in revenue, employment, and physical capital and face a higher probability of exiting the panel than comparable plants in less exposed industries. All these effects are concentrated among establishments with low initial levels of productivity.

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Additional Information

ISSN
1533-6239
Print ISSN
1529-7470
Pages
pp. 1-60
Launched on MUSE
2020-12-13
Open Access
No
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