Chinese vs. US trade in an emerging country. The impact of trade openness in Chile

Alexandra Sotiriou and Andrés Rodríguez-Pose

No 2121, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: This paper explores the effects of import competition on the manufacturing sector in Chile following the implementation of the country’s two largest Free Trade Agreements (FTA) (with the USA and China). Exploiting cross-industry variation in import exposure, we analyse the effects on manufacturing sales, employment and labour productivity at the finest level of industrial classification (4 digit ISIC level). We detect an overall negative effect of increased Chinese import penetration, owing to substitution effects from low and medium tech imports and a less pronounced effect from USA imports. By introducing interaction effects, we find that the levels of foreign ownership and the export intensity of the domestic industries reverse the negative effect due to the opportunities offered via participation in global value chains. An IV strategy is applied to address standard endogeneity concerns and confirm the robustness of our estimates.

Keywords: import penetration; free trade; manufacturing; Chile; China; USA (search for similar items in EconPapers)
JEL-codes: F13 F14 F16 (search for similar items in EconPapers)
Date: 2021-06, Revised 2021-06
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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http://econ.geo.uu.nl/peeg/peeg2121.pdf Version June 2021 (application/pdf)

Related works:
Journal Article: Chinese vs. US Trade in an Emerging Country: The Impact of Trade Openness in Chile (2021)
Working Paper: Chinese vs. US trade in an emerging country. The impact of trade openness in Chile (2021)
Working Paper: Chinese vs. US trade in an emerging country: the impact of trade openness in Chile (2021)
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