Global productivity distribution and trade liberalisation: evidence from processed food industries

Abstract

In this study, we test the hypothesis that an industry's average productivity increases with liberalised trade in the context of processed food industries. Furthermore, we examine the resulting cross-country resource and market share reallocation in these industries. For this purpose, we employ a kernel density estimator to approximate the global productivity distribution in five major processed food industries for every period between 1993 and 2000. We find that the mean and alternative percentiles of the global productivity distribution shift to the right with liberalised international trade. Moreover, countries with faster productivity growth than the global average benefit from trade liberalisation by acquiring a larger share of global markets and resources.

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