Dissecting the Chilean export boom

Abstract

Chilean exports have boomed since 1975, growing at an averageannual rate of 6% per year in real terms. In this paper, we use Chileanmanufacturing data at the plant level for the years from 1990 to 2007to investigate the relationship between exports, plant dynamics andproductivity. Our findings are consistent with the predictions of the newtheories of heterogeneous firms and trade. First, 64.4% of the totalincrease in exports is accounted for by new exporters net of failedexporters. This effect is a combination of a larger proportion of plantsexporting, a rising proportion of output sold abroad and a higher level oftotal sales. Second, productivity and exports co-moved over the courseof the Chilean boom, exports being positively correlated with both withinplantproductivity growth and the productivity-enhancing reallocation ofoutput between plants.