Growth
Impacts of Barriers to Trade
Pedro Cavalcanti Ferreira and Alberto Trejos
We study
the macroeconomic effects of international trade policy by integrating a
Hecksher-Ohlin trade model into an optimal-growth framework. The model predicts
that a more open economy will have higher factor productivity. Furthermore,
there is a "selective development trap," an additional steady state
with low income, to which countries may or may not converge, depending on
policy. Income at the development trap falls as trade barriers increase. Hence,
cross-country differences in barriers to trade may help explain the dispersion
of per-capita income observed across countries. The effects are quantified and
we show that protectionism can explain a relevant fraction of TFP and long-run income
differentials across countries.
Published, International Economic
Review, Vol. 47, No. 4, November 2006
A working
paper version is available here
Pedro Cavalcanti Ferreira and Giovanni Facchini
This paper
studies the relationship between industrial structure and the extent of trade
protection granted to Brazilian manufacturing industries during the 1988-1994
trade liberalization episode. Using a panel data set covering this period, we
find that even in an environment in which a major regime shift has been introduced,
more concentrated sectors have been able to obtain policy advantages, that lead
to a reduction in international competition. The importance of industry
structure appears to be substantial: In our baseline specification, an increase
in concentration by 20% leads to an increase in protection by 5%-7%.
Published
in the The
Quarterly Review of Economics and Finance, Vol. 45, Issues 2-3 , May 2005.
Pedro Cavalcanti Ferreira and José Luiz Rossi
This paper
presents evidence on the positive effect of international trade on productivity
growth using industrial level data preceding and following Brazil's trade
liberalization in 1988-1990. Brazil provides a rare policy experiment to study
this issue that is seldom available: it was one of the most closed economies in
the world until 1988 and intra-industry data are available on an annual basis
before, during and many years after liberalization. Our data reveal large and
widespread productivity improvement after barriers to trade were drastically
reduced. On average, total factor productivity grew at 3 percent a year and
labor productivity growth rates for all but one of the 16 industries we study
were above 5 percent. Econometric results confirm the association between trade
liberalization and productivity growth and show that the impact was indeed
substantial: the observed tariff reduction in the period brought a 6 percent
estimated increase in total factor productivity growth rate and a similar
impact on labor productivity.
Published
in the International
Economic Review, vol. 44, nº 4, November 2003
A working
paper version is available here
Pedro Cavalcanti Ferreira e Osmani Teixeira Guillén
This paper
analyzes the behavior of the Brazilian manufacturing industry after the reforms
implemented in the nineties. We examine the impact of trade liberalization on
industry productivity and estimate the markup of different industrial sectors
before and after trade liberalization. Estimates for markup showed
non-competitive practices in most sectors. It was also observed jumps of
productivity growht in the majority of the industrial sectors after the
reduction of the trade restrictions. There is no significant indication of fall
in the market power, which could point to the existence of other channels
responsible for the productivity increase than competition from abroad.
Published in the Revista Brasileira de Economia, vol. 58, nº 4, 2004
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Interest Groups, Determinants of Trade Policy,
and Industrial Productivity
Results
presented in this article show that there is substantial evidence of
endogeneity in Brazil’s trade policy and that more concentrated sector with
greater bargaining power and potentially more exposed to competition from
imports receive more protection. At the same time, another set of estimates
links trade-protection measures such as nominal tariffs and the rate of
effective protection with productivity growth. There is a negative relation
here, so that, all things being equal, in those industries where trade barriers
are higher, the productivity of labor and the total productivity of the factors
grow at a slower rate. Similarly, the larger the imports of machines and
equipment, the faster the sector grows. This way, the organized action and
lobbying of interest groups for more protection bears an indirect but relevant
impact on industrial performance and on the economy as a whole. The activity of
these groups has a long-term impact that has hitherto been ignored, since
indirectly it affects the growth rate of industrial productivity.
Paper
published in the home page of the Instituto Futuro
Brasil
Download
Portuguese version here
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English version here
Artigo publicado na revista Exame