Trade Boomers: Evidence from the Commodities-for-Manufactures Boom in Brazil

Abstract

Abstract China’s growing prominence as a trade superpower has placed competitive pressure on manufacturing industries in Brazil, while simultaneously bolstering demand for its commodities. I investigate the effects of this so-called manufactures-for-commodities boom on Brazilian birth outcomes from 2000 to 2010. Exploiting exogenous variation in patterns of trade growth with China across different regions within Brazil, I find that both import and export growth led to higher birth weights for babies, and lower infant mortality rates. I also find that negative import shocks reduced fertility rates across all age groups for women, suggesting that selectivity in births induced by negative income shocks, combined with concentration of household resources on the children that are born led to better infant health outcomes. Additional evidence is consistent with income effects playing a role in explaining the results, while ruling out better provision of healthcare and changes to household composition as mechanisms. I also explore changes in trade-induced pollution levels and social assistance programs as a potential mechanism. The findings indicate that increased import and export growth can improve infant health, highlighting another potential benefit from trade liberalization.