2009-07-11 papers

on Central and South America

Issue of 2009‒07‒11
two papers chosen by

The Contribution of Railways to Economic Growth in Latin America before 1914: the cases of Mexico, Brazil and Argentina By Alfonso Herranz-Loncán
Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia By Eslava, Marcela; Haltiwanger, John C.; Kugler, Adriana; Kugler, Maurice

The Contribution of Railways to Economic Growth in Latin America before 1914: the cases of Mexico, Brazil and Argentina

By:	Alfonso Herranz-Loncán (Departament d’Història i Institucions Econòmiques, Universitat de Barcelona)
Abstract:	This paper presents preliminary estimates of the contribution of the railway technology to GDP growth in Argentina, Brazil and Mexico before 1914, and compares them with the available figures for two European economies (Britain and Spain). The results of the estimation indicate that the growth contribution of railways was substantially higher in those three Latin American economies than in Britain or Spain, although in Argentina and Mexico that high contribution was disguised behind the fast growth of the aggregate economy. This result is interpreted as a sign of the central role that the railways performed in the export-led growth episode of those three economies.
Keywords:	railways, Latin America, Growth Contribution, Internal Transport, Export-Led Growth
JEL:	N76 H54 L92
Date:	2009–07
URL:	http://d.repec.org/n?u=RePEc:ahe:dtaehe:0903&r=lam

Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia

By:	Eslava, Marcela (Universidad de los Andes); Haltiwanger, John C. (University of Maryland); Kugler, Adriana (University of Houston); Kugler, Maurice (Wilfrid Laurier University)
Abstract:	We use plant output and input prices to decompose the profit margin into four parts: productivity, demand shocks, mark-ups and input costs. We find that each of these market fundamentals are important in explaining plant exit. We then use variation across sectors in tariff changes after the Colombian trade reform to assess whether the impact of market fundamentals on plant exit changed with in creased international competition. We find that greater international competition magnifies the impact of productivity, and other market fundamentals, on plant exit. A dynamic simulation that compares the distribution of productivity with and without the trade reform shows that improvements in market selection from trade reform help to weed out the least productive plants and increase average productivity. In addition, we find that trade liberalization increases productivity of incumbent plants and improves the allocation of activity within industries.
Keywords:	trade liberalization, plant exit, market selection
JEL:	F43 L25 O47
Date:	2009–06
URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp4256&r=lam

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