Department of Economics and Business - Universitat Pompeu Fabra

Title:: Trade liberalization, exports and technology upgrading: Evidence on the impact of MERCOSUR on Argentinean firms
Author:: Paula Bustos
Date:: August 2009
Abstract:: This paper studies the impact of a regional free trade agreement, MERCOSUR, on technology upgrading by Argentinean firms. To guide empirical work, I introduce technology choice in Melitz’s (2003) model of trade with heterogeneous firms. The joint treatment of the technology adoption and exporting choices shows that the increase in revenues produced by trade integration can induce exporters to upgrade technology. An empirical test of the model reveals that firms in industries facing higher reductions in Brazil’s tariffs increase their investment in technology faster. The effect of tariffs on entry in the export market and technology adoption is highest in the upper-middle range of the firm size distribution, as predicted by the model.
Keywords:: Trade Liberalization, Heterogeneous Firms, Exports, Technology Adoption, MERCOSUR, Argentina.
JEL codes:: D21, F12, F14, L60, O30.
Area of Research:: Macroeconomics and International Economics
Published in:: American Economic Review, 101 (1), 304-340, 2011.

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