Journal Article

Trade Liberalization and New Imported Inputs

Pavcnik, Nina, Topalova, Petia, Goldberg, Pinelopi, Khandelwal, Amit

2009

Overview

This article provides evidence that trade reform might have benefited India firms not only by providing access to more and cheaper inputs, but also, crucially, through importing new input goods and varieties as trade barriers fell. While this work focuses on a particular developing country, India, Estevadeordal and Taylor (2008) offer cross-country evidence that declines in tariffs on capital and intermediate goods can raise GDP growth in countries that implement trade reforms. This suggests that the microeconomic mechanisms uncovered from detailed analyses of firms in specific developing countries may be generalizable. More generally, the availability of detailed firm and trade flow data enables researchers to explore the exact mechanisms through which international trade affects the performance of domestic firms, and ultimately productivity growth. Examining the microfoundation of the link between international trade and growth will thus likely continue to be a promising area of research.

• Publisher: American Economic Association
• Subject: Codes / Companies / Competition / Cross-national analysis / Decomposition / Developing countries / Economic policy / Economic theory / Economics / Free trade / Growth models / Import price indices / Imports / Input-output analysis / Integrated circuits / International trade / LDCs / Liberalization / Machinery / Microeconomics / National economy / New variety / Organizational effectiveness / Productivity / Reforms / Studies / Trade / Trade barriers / Trade development / Trade flows / Trade liberalization / Trade policy / Trade, Product Turnover and Quality / Working papers