Chinese vs. US Trade in an Emerging Country: The Impact of Trade Openness in Chile

This paper explores the effects of import competition on manufacturing sector in Chile following implementation country’s two largest Free Trade Agreements (FTA) (with USA and China). Exploiting cross-industry variation exposure, we analyse sales, employment labour productivity at finest level industrial classification (4 digit ISIC level). We detect an overall negative effect increased Chinese penetration, owing to substitution from low medium tech imports a less pronounced imports. By introducing interaction effects, find that levels foreign ownership export intensity domestic industries reverse due opportunities offered via participation global value chains. An IV strategy is applied address standard endogeneity concerns confirm robustness our estimates.