Date Published:
Jun 01, 2010
Category:
Discussion Papers
Focus Area(s):
Code:
DP 2010-32

The recent trade and productivity literature shows that trade liberalization can lead to productivity gains through increased competition and exit of inefficient firms and reallocation of market shares in favor of more efficient firms. In this paper, an attempt is made to examine the impact of trade liberalization on firm productivity in the Philippines. The country presents an interesting case due to its adoption of selective protection amidst an incomplete trade liberalization process. Based on an unbalanced firm-level panel dataset covering an eight-year period from 1996 to 2006, the results provide some evidence in support of the hypothesis that trade liberalization leads to productivity gains and conversely, protection leads to productivity losses. This is confirmed by the negative and significant coefficient on EPR for the purely importable sector. The results tend to indicate that the selective protection policy undermined the process of output restructuring and reshuffling of resources from less productive to more productive firms as protection of selected industries allowed the survival of inefficient firms.

Citations

This publication has been cited 10 times

In other Publications
  1. Aldaba, Rafaelita M. 2012. Trade reforms, competition, and innovation in the Philippines. Discussion Papers DP 2012-06. Philippine Institute for Development Studies.
  2. Aldaba, Rafaelita M. 2012. Surviving trade liberalization in Philippine manufacturing. Discussion Papers DP 2012-10. Philippine Institute for Development Studies.
  3. Aldaba, Rafaelita M. 2014. The Philippine manufacturing industry roadmap: agenda for new industrial policy, high productivity jobs, and inclusive growth. Discussion Papers DP 2014-32. Philippine Institute for Development Studies.
  4. Aldaba, Rafaelita M.. 2013. Impact of trade liberalization on wage skill premium in Philippine manufacturing. Discussion Papers DP 2013-25. Philippine Institute for Development Studies.
  5. Aldaba, Rafaelita M.. 2012. Surviving trade liberalization in Philippine manufacturing. Discussion Papers DP 2012-10. Philippine Institute for Development Studies.
  6. Aldaba, Rafaelita M.. 2012. Trade reforms, competition, and innovation in the Philippines. Discussion Papers DP 2012-06. Philippine Institute for Development Studies.
  7. Aldaba, Rafaelita M.. 2012. Trade reforms, competition, and innovation in the Philippines. Working Papers DP-2012-05. Economic Research Institute for ASEAN and East Asia (ERIA).
  8. Majuca, Ruperto P. 2011. An estimated (closed economy) dynamic stochastic general equilibrium model for the Philippines: Are there credibility gains from committing to an inflation targeting rule?. Discussion Papers DP 2011-04. Philippine Institute for Development Studies.
  9. Rafaelita Aldaba. 2012. Impact of trade liberalization on wage skill premium in Philippine manufacturing. edited by Chine Hee Hahn and Dionisius Narjoko, 69-105. Economic Research Institute for ASEAN and East Asia (ERIA).
  10. Rafaelita Aldaba. 2013. Impact of trade liberalization on wage skill premium in Philippine manufacturing. Impact of Globalization on Labor Market, Chapter 4, 69-105. Economic Research Institute for ASEAN and East Asia (ERIA). .


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