Seminario CEDE - Nicolás de Roux

We study the medium- and long-term effects of Venezuela’s 2009 ban on imports from Colombia on Colombian manufacturing firms. Using a synthetic control design, we first document a significant targeted reduction in Venezuelan imports from Colombia between 2009 and 2013. We then leverage microdata from customs transactions and the manufacturing census to compare the performance of firms with varying exposure to the trade war—as determined by the proportion of their previous exports destined to Venezuela. Through difference-in-differences and event-study approaches, we show that exposed firms experienced a notable decline in exports, total sales, and production, yet there was no impact on their survival probability. Moreover, these firms reduced their capital stock, input usage, labor, and wages. These contractionary effects persist up to ten years after the trade war, though firms initially exporting to a larger number of destinations seem to be less affected. We find no effects on standard measures of productivity, suggesting that firm capabilities and know-how remain unchanged. Despite evidence of firms adapting by diversifying exports to other countries, this shift was not sufficient to ensure a full recovery.