Dissecting the Chilean export boom

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