The effect of tariff reductions on firm size and firm turnover in Canadian manufacturing
The Canada-U.S. Free Trade Agreement (FTA) committed the two countries to eliminate all manufacturing tariffs over a ten-year period, beginning in 1989. Recent empirical evidence on the effect of these tariff cuts on the Canadian economy suggests that the tariff reductions significantly improved productivity performance in Canadian manufacturing. However, the sources of these FTA-induced productivity gains are not clear. This paper examines two likely sources based on the predictions of theoretical trade models: increased firm size and increased firm turnover.
"The Canada-U.S. Free Trade Agreement (FTA) committed the two countries to eliminate all manufacturing tariffs over a ten-year period, beginning in 1989. Recent empirical evidence on the effect of these tariff cuts on the Canadian economy suggests that the tariff reductions significantly improved productivity performance in Canadian manufacturing. However, the sources of these FTA-induced productivity gains are not clear. This paper examines two likely sources based on the predictions of theoretical trade models: increased firm size and increased firm turnover."@en
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