| Abstract: |
This paper proposes a new link relating export destinations and the
organization of the firm. We claim that the production of higher-quality
varieties exported to rich destinations induces firms to re-structure their
production processes, becoming organizationally more complex. We introduce a
theoretical model with these features and we explore the mechanisms using a
panel of Chilean manufacturing plants. Our identification strategy relies on
falling tariffs on Chilean products across destinations caused by the
signature of Free Trade Agreements with high-income countries (the European
Union, the United States, and South Korea). We find that Chilean plants that
were induced by these tariff reductions to start exporting to high-income
destinations increased the number of hierarchical layers and upgraded the
quality of their products. This involved the addition of qualified supervisors
that facilitated the provision of higher product quality. These effects took
place at new high-income exporting firms. |