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Trade as an engine of creative destruction: Mexican experience with Chinese competition

Iacovone, Leonardo and Winters, L.A. (2010) Trade as an engine of creative destruction: Mexican experience with Chinese competition. CEP Discussion Papers (CEPDP0999). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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This paper exploits the surge in Chinese exports from 1994 to 2004 as a natural experiment toevaluate the effects of a unilateral low wage trade and competition shock to producers in Mexico. Wefind that this shock causes selection at both firm and product levels as its impact is highlyheterogeneous both on the intensive and extensive margins. Sales of smaller plants and more marginalproducts are compressed and are more likely to cease, while larger plants and products exhibit anopposite response. Similar results hold both for the domestic market and for competition facingMexican exporters in a third market (i.e. the United States).

Item Type: Monograph (Report)
Official URL:
Additional Information: © 2010 The Authors
Divisions: LSE
Subjects: H Social Sciences > HF Commerce
JEL classification: F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
Date Deposited: 28 Feb 2013 16:54
Last Modified: 16 May 2024 13:17

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