Does Import Competition Force Efficient Production?

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Abstract
Increases in import competition led to large increases in labor productivity growth in highly concentrated industries during the period from 1975 through 1987. The finding is based on a panel of 94 manufacturing industries observed over four periods, each of three years duration. Imports had no observable effects on productivity growth in less concentrated industries; the strong effects in concentrated industries did not occur contemporaneously, but appeared with a one period lag. The effects are weakened but still statistically significant when BLS productivity data are replaced by NBER data, and in a larger panel with less precise trade data.

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