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  3. American Economic Review
  4. February 2011
  5. Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms

  • Paula Bustos
American Economic Review
vol. 101, no. 1, February 2011
(pp. 304–40)
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Abstract

This paper studies the impact of a regional free trade agreement, MERCOSUR, on technology upgrading by Argentinean firms. To guide empirical work, I introduce technology choice in a model of trade with heterogeneous firms. The joint treatment of the technology and exporting choices shows that the increase in revenues produced by trade integration can induce exporters to upgrade technology. An empirical test of the model reveals that firms in industries facing higher reductions in Brazil's tariffs increase investment in technology faster. The effect of tariffs is highest in the upper-middle range of the firm-size distribution, as predicted by the model. (JEL F13, F15, O19, O24, O33)

Citation

Bustos, Paula. 2011. "Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms." American Economic Review, 101 (1): 304–40. DOI: 10.1257/aer.101.1.304

Additional Materials

JEL Classification

  • F13 Trade Policy; International Trade Organizations
  • F15 Economic Integration
  • O19 International Linkages to Development; Role of International Organizations
  • O24 Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy
  • O33 Technological Change: Choices and Consequences; Diffusion Processes