Epifani, Paolo2014-05-092014-05-092003-05https://hdl.handle.net/10986/18220reviews the micro-level evidence on the effects of trade and investment liberalization in the developing world. He focuses, in particular, on the effects of the 1991 trade reform in India since it provides an excellent controlled experiment in which the effects of a drastic trade regime change can be measured. His main findings are: 1) There is evidence of trade-induced productivity gains (in this respect, however, India is an exception. 2) These gains mainly stem from intra-industry reallocation of resources among firms with different productivity levels. 3) The gains are larger in import-competing sectors. 4) There is no evidence of significant scale efficiency gains. Unilateral trade liberalization is often associated with a reduced scale efficiency. 5) There is evidence of a pro-competitive effect of trade liberalization. 6) There is no evidence either of learning-by-exporting effects or of beneficial spillover effects from foreign-owned to local firms active in the same sectors. 7) There is evidence, however, of positive vertical spillovers from foreign direct investment. 8) There is evidence of skill upgrading induced either by technology imports or by trade-induced reallocations of market shares in favor of plants with higher skill-intensity. 9) There is no evidence of trade-induced increases in labor demand elasticities. But direct evidence suggests that trade exposure raises wage volatility. 10) There is no evidence of substantial employment contraction in import-competing sectors.en-USCC BY 3.0 IGOAGGREGATE DEMANDALLOCATIVE EFFICIENCYAVERAGE PRODUCTIVITYBILATERAL TARIFFCAPACITY BUILDINGCAPITAL GOODSCAPITAL STOCKCAPITAL-OUTPUT RATIOCOMPARATIVE ADVANTAGECOMPETITIVE MARKETSCONSUMER PRICESDEMAND CURVEDEMAND ELASTICITIESDEMAND ELASTICITYDEVELOPED COUNTRIESDEVELOPMENTDIVISION OF LABORDOMESTIC FIRMSDOMESTIC INDUSTRYDOMESTIC MARKETDOMESTIC PRODUCERSDOMESTIC PRODUCTIONDYNAMIC EFFECTSELASTICITIESELASTICITYELASTICITY OF SUBSTITUTIONEMPIRICAL ANALYSISEMPIRICAL EVIDENCEEMPIRICAL STUDIESEMPLOYMENTEQUILIBRIUMEXPENDITURESEXPLOITATIONEXPORTERSEXTERNALITIESFIXED COSTSFOREIGN COMPETITIONFOREIGN DIRECT INVESTMENTFOREIGN FIRMSFOREIGN INVESTMENTFOREIGN MARKETFOREIGN MARKETSFOREIGN STANDARDSFOREIGN TARIFFFREE ENTRYFREE TRADEFULL EMPLOYMENTGROWTH RATEHUMAN CAPITALIMPACT OF TRADEIMPACT OF TRADE LIBERALIZATIONIMPERFECT COMPETITIONIMPORT COMPETITIONIMPORT PENETRATIONIMPORT-COMPETING SECTORSIMPORTSINCOMEINCOME INEQUALITYINCREASING COMPETITIONINCREASING RETURNSINCREASING RETURNS TO SCALEINDUSTRIAL EXPANSIONINDUSTRIAL RESTRUCTURINGINDUSTRIALIZATIONINTERMEDIATE INPUTSINTERNATIONAL COMPETITIONINVESTMENT LIBERALIZATIONKNOWLEDGE DIFFUSIONKNOWLEDGE SPILLOVERSLABOR MARKETLABOR MARKET OUTCOMESLOCAL FIRMSMARGINAL COSTMARGINAL COSTSMARGINAL REVENUEMARKET POWERMARKET SHAREMARKET SHARESMARKET STRUCTUREMEASURE OF TRADENORMAL PROFITSPER CAPITA INCOMEPRICE INDEXPRODUCERSPRODUCTION FUNCTIONPRODUCTION TECHNOLOGYPRODUCTIVITYPRODUCTIVITY GROWTHPROFIT MAXIMIZATIONRATE OF INNOVATIONREDUCTION IN TARIFFSRETURN ON CAPITALRETURNS TO SCALESCALE ECONOMIESSCALE EFFECTSSPECIALIZATIONSTATIC EFFECTSTARIFF PROTECTIONTARIFF RATESTARIFF REDUCTIONSTECHNICAL CHANGETECHNICAL PROGRESSTECHNOLOGY DIFFUSIONTECHNOLOGY TRANSFERSTOTAL OUTPUTTRADETRADE AGREEMENTTRADE COSTSTRADE EFFECTSTRADE INTEGRATIONTRADE LIBERALIZATIONTRADE LIBERALIZINGTRADE MODELSTRADE POLICYTRADE PROTECTIONTRADE REFORMTRADE REFORMSTRADE REGIMETRADE THEORYUNEMPLOYMENTUNILATERAL TRADEUNILATERAL TRADE LIBERALIZATIONUTILITY FUNCTIONVALUE OF OUTPUTWAGE INEQUALITYWAGESWELFARE GAINS TRADE LIBERALIZATIONSMALL & MEDIUM SCALE ENTERPRISESLABOR MARKET CHARACTERISTICSINVESTMENT OPERATIONSPRODUCTIVITYREALLOCATION OF FUNDSRESOURCES MOBILIZATIONRESOURCES UTILIZATIONIMPORT LIBERALIZATIONCOMPETITIVENESSSPILLOVER EFFECTSFOREIGN DIRECT INVESTMENTSLABOR DEMANDELASTICITY OF DEMANDWAGE RATEWELFARE GAINSTRADE LIBERALIZATION10.1596/1813-9450-3063