infonet-economy

This paper estimates the effect of trade liberalization on growth, using plant-level data from Switzerland. We employ a natural experiment framework to quantify the effect of a bundle of treaties liberalizing trade between Switzerland and the EU enacted in June 2002 ("Bilateral Agreements I") on the growth of Swiss plants. Using both a semi-parametric difference-in-differences and a matching approach, we find that the liberalization of trade increased the growth of affected plants by 1-2 percent during the first six years after liberalization. Our results suggest that trade liberalization has a relevant effect on growth.