TREND GROWTH: MEDIUM-TERM OUTLOOK AND ANALYSIS OF FUNDAMENTALS SEPTEMBER 2017
target markets.10 Eaton and Kortum (1996, 1997) provide empirical evidence of this mechanism based on the calibration of a trade model with aggregate data, and find that an important share of productivity growth in OECD countries comes from trade integration with the more advanced countries of the group. The third channel (related to the second) highlights the incentives to explicitly increase investment in technology and R&D in response to changes in the international trade environment. Using the Mercosur trade agreement as a natural experiment, Bustos (2011) documents that exporters in Argentina that benefited most from the reduction of tariffs experienced greater increases in specific measures of technology investments.11 Bloom et al. (2016) provide similar evidence of an increase in specific metrics of investment on innovation for European import-substitution firms, in response to increased competition from Chinese imports in the early 2000s. There are also several studies that try to measure the impact of trade on the measured productivity of firms, without being explicit (in either theory or measurement) regarding the mechanisms that lead to this increase in productivity. This strategy, however, can be problematic if there is reverse causality, as the most productive firms are more likely to be able to pay the fixed costs of entering international markets. De Loecker (2013) argues that endogeneity can lead to biases in estimating the causal effect of trade on productivity, which would explain why previous studies find small nonsignificant effects.12 The paper finds substantial productivity gains in Slovenian export firms using instrumental variables that account for this bias. Highlighting other methodological problems, GarcĂa and Voigtlander (2013) argue that the most common measurement of productivity in the data does not control for changes in prices due to the lack of deflators at the plant level. Because increases in production are generally associated with lower sale prices, this would underestimate the gains in productivity associated with exportingg. Using marginal cost data as an alternative measure of productivity improvements, the authors find substantial efficiency gains in export firms.
IV.4 EXTENSIVE MARGIN: CONTRIBUTION OF THE REALLOCATION OF FACTORS The results of table IV.1 suggest that a non-negligible part of aggregate TFP gains comes from the reallocation of factors among firms with different levels of individual productivity. However, these results show the degree of actual reallocation and not necessarily the true potential for aggregate efficiency gains that could be obtained if the process of reallocation to more productive firms was faster and on a larger scale. Estimating these potential gains and understanding the factors that facilitate or prevent their realization through the reallocation of resources has been one of the main research topics in the productivity and development literature of the last decade. / See Ă lvarez et al. (2014), and Buera and Oberfield (2016). / Keller and Yeaple (2009) find a positive relationship between imports and technological adoption, although their effect on knowledge diffusion would be lower and less robust than that estimated for foreign direct investment. 12 / See Keller (2004) and Wagner (2007). 10 11
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