The influence of international trade on labour productivity in services: The case of Brazil in the 1990s

Abstract

In the developing world, services account for a rising share of domestic employment and international trade. Thus, it is important to know whether trade liberalization contributes to labour productivity in services. We explore this question, examining the 1990–2000 Brazilian trade liberalization. We find that growth of imports and exports strengthened labour productivity in services, but the contribution was smaller in subsectors with more college graduates, and this negative offset was larger in subsectors that received large foreign direct investment (FDI) inflows. Improved access to imported manufactured intermediate inputs raised downstream services' labour productivity and downstream manufacturing firms benefitting from tariff cuts enacted by trade partners generated spillovers that improved the labour productivity of upstream service subsectors. However, FDI inflows and investments in human and physical capital modified these downstream factors. We conclude that the Brazilian trade liberalization strengthened productivity in services, but unequally across subsectors.

Determinants of labor productivity in the USA

“…The combined and individual impact of these factors can positively or negatively affect the increase or decrease of the productivity level of a particular production process (Skrynnyk, 2023). Gardner et al (2023) considered how international trade indicators affect labor productivity; the calculation was carried out using statistical methods. Atiyatna et al (2021) applied the logistic regression method to search for factors influencing labor productivity and found that human capital, place of residence, gender, and working hours significantly affect labor productivity indicators.…”