Plant level evidence on product mix changes in Chilean manufacturing

Abstract

This paper analyzes changes in the product mix by Chilean manufacturing plants in the period 1996-2003. Three-quarters of the surviving plants changed the set of products produced and more than three-quarters of the exporting plants changed the mix of products they exported during the sample period. Plants that changed their product mix contributed 85% of the aggregate growth in real sales of surviving plants between 1996 and 2003. Finally and in contrast to the US evidence, there is a negative correlation between revenue per product and the number of products. Apart from this, new evidence consistent with recent models of multi-product heterogeneous …rms and trade is provided.

On tariff changes and firm-production evolution: insights from Turkish manufacturing

“…Despite the relevant presence of multi-product firms, firms' manufacturing activity is, in general, highly concentrated. Consistently with the previous literature (Bernard, Redding, and Schott 2010;Goldberg et al 2010b;Navarro 2012), the firm distribution of sales across products is rather skewed. Table 1 reports firmproduction shares of products by sorting goods from the one with the largest share to the one with the smallest share.…”

“…Foreign ownership, instead, is not significant. In line with previous works, the probability of dropping a product is higher, in general, for fringe products (Bernard, Redding, and Schott 2010;Iacovone and Javorcik 2010;Navarro 2012). This finding could also reveal firm engagement in a process of trials and errors in the product scope expansion and the entry in new productions and recalls analogous evidence on the uncertain profitability of new export product entry (Freund and Pierola 2010;Eaton et al 2011;Albornoz et al 2012).…”

“…Bernard, Redding, and Schott (2010) for the USA and Goldberg et al (2010b) for India show that although the intensive margin -changes of existing products' output -is the main driver of output growth of continuing firms in manufacturing, their extensive margin -changes in firm product mix -is quantitatively significant. For Chilean firms the latter is, instead, the most important component of manufacturing output growth (Navarro 2012). Empirical evidence, thus, confirms that the within firm-product churning can significantly contribute to the economic development and, even in case of an unchanged basket of produced goods, the existing products' expansion and contraction is not an unimportant matter.…”

“…More specifically, as already shown for other countries (Goldberg et al 2010b;Navarro 2012), multiproduct firms play an important role in the manufacturing sector of the Turkish economy too, as they account for about 40% of firms and 70% of production and produce on average four different goods (Table B2). Despite the relevant presence of multi-product firms, firms' manufacturing activity is, in general, highly concentrated.…”

“…Empirical evidence, thus, confirms that the within firm-product churning can significantly contribute to the economic development and, even in case of an unchanged basket of produced goods, the existing products' expansion and contraction is not an unimportant matter. Also, multi-product firms account for a relevant share of a country's manufacturing sector and changes in their product mix constitute an essential part of industry dynamics, both in developed and developing economies (Navarro 2012;Bernard, Redding, and Schott 2010). 2.…”