Productivity and trade openness in Ecuadorʹs manufacturing industries

This study takes an empirical look at whether Ecuadorʹs trade liberalization in the 1990s increased or decreased the productivity of Ecuadorian manufacturing establishments for the period 1997–2003. This research applies robust estimation procedures on micro-level data, controlling for a number of other economic events that may have affected productivity during the period under study. The study takes a particular look at how both exporters and import-competing sectors respond to trade openness. The results suggest evidence of a positive and significant effect of trade openness on the productivity of manufacturing industries in export-oriented industries in the years after the implementation of trade reforms, but decreasing productivity after 2000. Increased aggregate productivity might be a result of both the most productive establishments producing output, and slightly increased own-plantʹs productivity.