Essays on Industrial Policy, Structural Change, and International Trade

Author

Hollstein, Till Ferdinand

Director

Estévez, Kristian

Sánchez-Losada, Fernando

Date of defense

2018-09-21

Pages

103 p.



Department/Institute

Universitat de Barcelona. Facultat d'Economia i Empresa

Abstract

The purpose of the thesis is to investigate the impact of patterns of trade on the structural composition of an economy. We show that trade affects an economy’s productivity by shifting labor across broad sectors and reallocating resources across firms within sectors. In the first chapter, we examine how the introduction of a labor subsidy in the manufacturing sector affects manufacturing employment in a Ricardian trade model. Furthermore, the trade-off between subsidy distortions, dynamic productivity gains in the manufacturing sector and gains from trade are examined. We derive a critical labor subsidy. If a labor subsidy is larger than this critical subsidy, TFP growth in the manufacturing sector is higher than in the agricultural sector and the economy industrializes. Accelerated TFP growth can outweigh the welfare reducing distortions of labor subsidies in the long run. In the second chapter, we investigate the role of quality of traded goods. We analyze a U.S. import data set and show that firms within a sector may find it profitable to export different quality levels and the quality of exported goods is bimodally distributed within these sectors. We address these results by extending the standard heterogeneous firms trade model with endogenous intermediate input quality choice and assuming that there exists quality complementarity between a firm’s capability and their choice of intermediate input quality. In the third chapter, we examine the interrelationship between patterns of trade and premature deindustrialization. We develop a multi-sector two-economy model that allows for inter- and intra- industry trade and find an additional channel through which a developing economy may deindustrialize. Manufacturing production requires intermediate inputs that must be imported from high-income economies. The foreign technology embodied in those inputs reduces the relative price of manufactured goods over services. This effect is independent of trade openness in the manufacturing sector. Summarizing, the thesis emphasizes the role of international trade on economic growth, structural composition, and firm selection and studies the consequences of their interdependence.

Keywords

Comerç internacional; Comercio internacional; International trade; Indústria manufacturera; Industria manufacturera; Manufacturing industries; Política econòmica; Política económica; Economic policy; Economia internacional; Economía internacional; International economic relations; Desenvolupament econòmic; Desarrollo económico; Economic development

Subjects

339 - Trade. Commerce. International economic relations. World economy

Knowledge Area

Ciències Jurídiques, Econòmiques i Socials

Documents

TFH_PhD_THESIS.pdf

963.3Kb

 

Rights

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