Dissecting the chilean export boom

Abstract

Since 1975 Chilean exports have boomed growing at a 6% average rate per year in real terms. In this paper we use manufacturing Chilean data at the plant level for years 1990 to 2007 to investigate the relationship between exports, plant dynamics and productivity. Our findings are consistent with the predictions of the new heterogeneous firms’ trade theories. Firstly, 64.4% of the total increase in exports is accounted for by new exporters net of failed exporters. This effect is a combination of a larger fraction of plants that export, a rising fraction of output sold abroad and a larger level of total sales. Secondly, productivity and exports co-moved over the Chilean boom, with a positive correlation of exports with both within plant productivity growth and productivity enhancing reallocation of output across plants.