The Effects of International Trade on Resource Misallocation: Trade Partner Matters (Replaced by CentER DP 2012-046)

Research output: Working paperDiscussion paperOther research output

Abstract

This paper suggests that contingent on the productivity level of the trade partner; international trade may create resource misallocation in less productive countries. It theoretically shows how productivity spillovers induced by trade with more productive countries and heterogeneity in pro- ductivity distributions across sectors lead to asymmetric pro-competitive effects, which in turn result in misallocation. It also presents robust empirical evidence supporting the model predictions by showing that trade with more productive regions as a share of purchasing power parity (PPP) GDP (1) increases economy wide markup variation, (2) raises mean sectoral productivity, and (3) decreases productivity dispersion within 4-digit sectors, only in less productive countries.
Original languageEnglish
Place of PublicationTilburg
PublisherEconomics
Number of pages42
Volume2011-125
Publication statusPublished - 2011

Publication series

NameCentER Discussion Paper
Volume2011-125

Fingerprint

Misallocation
Resources
Productivity
International trade
Productivity spillovers
Empirical evidence
Competitive effect
Purchasing power parity
Prediction model
Markup

Keywords

  • International trade
  • knowledge spillovers
  • firm size
  • misallocation

Cite this

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title = "The Effects of International Trade on Resource Misallocation: Trade Partner Matters (Replaced by CentER DP 2012-046)",
abstract = "This paper suggests that contingent on the productivity level of the trade partner; international trade may create resource misallocation in less productive countries. It theoretically shows how productivity spillovers induced by trade with more productive countries and heterogeneity in pro- ductivity distributions across sectors lead to asymmetric pro-competitive effects, which in turn result in misallocation. It also presents robust empirical evidence supporting the model predictions by showing that trade with more productive regions as a share of purchasing power parity (PPP) GDP (1) increases economy wide markup variation, (2) raises mean sectoral productivity, and (3) decreases productivity dispersion within 4-digit sectors, only in less productive countries.",
keywords = "International trade, knowledge spillovers, firm size, misallocation",
author = "M. Curuk",
note = "Pagination: 42",
year = "2011",
language = "English",
volume = "2011-125",
series = "CentER Discussion Paper",
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The Effects of International Trade on Resource Misallocation : Trade Partner Matters (Replaced by CentER DP 2012-046). / Curuk, M.

Tilburg : Economics, 2011. (CentER Discussion Paper; Vol. 2011-125).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - The Effects of International Trade on Resource Misallocation

T2 - Trade Partner Matters (Replaced by CentER DP 2012-046)

AU - Curuk, M.

N1 - Pagination: 42

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N2 - This paper suggests that contingent on the productivity level of the trade partner; international trade may create resource misallocation in less productive countries. It theoretically shows how productivity spillovers induced by trade with more productive countries and heterogeneity in pro- ductivity distributions across sectors lead to asymmetric pro-competitive effects, which in turn result in misallocation. It also presents robust empirical evidence supporting the model predictions by showing that trade with more productive regions as a share of purchasing power parity (PPP) GDP (1) increases economy wide markup variation, (2) raises mean sectoral productivity, and (3) decreases productivity dispersion within 4-digit sectors, only in less productive countries.

AB - This paper suggests that contingent on the productivity level of the trade partner; international trade may create resource misallocation in less productive countries. It theoretically shows how productivity spillovers induced by trade with more productive countries and heterogeneity in pro- ductivity distributions across sectors lead to asymmetric pro-competitive effects, which in turn result in misallocation. It also presents robust empirical evidence supporting the model predictions by showing that trade with more productive regions as a share of purchasing power parity (PPP) GDP (1) increases economy wide markup variation, (2) raises mean sectoral productivity, and (3) decreases productivity dispersion within 4-digit sectors, only in less productive countries.

KW - International trade

KW - knowledge spillovers

KW - firm size

KW - misallocation

M3 - Discussion paper

VL - 2011-125

T3 - CentER Discussion Paper

BT - The Effects of International Trade on Resource Misallocation

PB - Economics

CY - Tilburg

ER -