Trade Liberalization, Firm Performance and Labour Market Outcomes in the Developing World: What Can We Learn from Micro-LevelData?

the economy in order to stimulate the firm to firm mobility of resources so as to allow a better
exploitation of trade-induced efficiency gains.

It is worth noting, in closing, that the above results are not robust enough, however. They
are often plagued by methodological hurdles (in particular, by the difficulty to identify the trade
effects), or by the poor quality of the data, and in particular by the fact that, while most trade
effects only materialize in the long-run, most empirical analyses are bounded, instead, to look at
data which only cover very short time spans. Empirical studies on the effects of India’s trade liber-
alization are not exempt from these problems. This may help explain, for instance, the contrasting
results concerning the productivity gains from India’s trade reform. Hence more effort is necessary
to better our understanding of the effects of trade reforms in developing countries in general, and
in India in particular.

References

[1] Acemoglu, D.(1999). “Patterns of Skill Premia,” NBER Working Paper W 7018.

[2] Acemoglu, D.(1998). “Why Do New Technologies Complement Skills? Directed Technical
Change and Wage Inequality,” Quarterly Journal of Economics 113, 1055-1090.

[3] Aitken, B. and A. Harrison (1994). “Do Domestic Firms Benefit from Foreign Direct Invest-
ment? Evidence from Panel Data,” Policy Research W.P. No.1248, Policy Research Depart-
ment, World Bank, Washington DC.

[4] Autor, D.H., L.F. Katz and A.B. Krueger (1998). “Computing Inequality: Have Computers
Changed the Labor Market?,” Quarterly Journal of Economics 113, 1169-1213.

[5] Aw, B., X. Chen and M.J. Roberts (1997), “Plant-Level Evidence on Productivity Differen-
tials,” mimeo, Pennsylvania State University.

[6] Bacchetta, M. and M. Jansen (2001). “Adjusting to Trade Liberalization,” WTO, mimeo.

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