UC Davis Agricultural and Resource Economics

ARE at AAEA: Oscar Barriga Cabanillas: The effect of local industry competition and trade on firm productivity. Evidence from the Mexican manufacturing industry

July 31, 2018

Time: 11:30 a.m. – 12:45 p.m. Tuesday, Aug. 7
Location: Exhibit Hall B South


There is an increasing number of studies seeking to explain which factors stimulate economic productivity. Those that study the productivity effects of local industry concentration have focused on the effects through agglomeration. This paper contributes to this literature by studying the joint effects of competition and exposure to trade on economic productivity in a developing country context. The analysis exploits a unique dataset that allows estimating concentration indices and economic productivity at the 3-digit manufacturing sector for more than seventy metropolitan areas over a 20-year period in Mexico. Using an instrumental variable approach for the industry concentration index the results show that increasing industry concentration has a negative effect on productivity. However, such negative effects are neutralized, and depending on the sector, reversed, as a consequence of exposure to external markets.

*This is information about one of the 17 people from ARE with a presentation at the 2018 AAEA Annual Meeting Aug. 5–7 in Washington, D.C.


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