Does trade liberalization lead to productivity increases? A case study of Bolivian manufacturing

Abstract

Abstract The impact of a more open trade regime on productivity is often cited as a major argument for trade liberalization. The paper reviews the theoretical arguments linking trade liberalization and productivity growth and the existing empirical evidence. It then provides an analysis of the Bolivian experience since the mid‐1980s, paying particular attention to three main mechanisms through which liberalization might lead to increased productivity. It concludes that there is no evidence that the Bolivian trade reforms have led to improved productivity performance.

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