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Another reason to love Wal-mart (Economist.com, 11/27/06)

APPARENTLY Wal-Mart doesn't just bring new business to foriegn countries; it also brings new business culture. A new NBER paper by Beata Smarzynska Javorcik, Wolfgang Keller, and James Tybout looks at how the Mexican soap, detergent, and surfactants ("SDS") industry fared under NAFTA and GATT. They found that the industry experienced gains in productivity and acquired a greater share of the US market—about what you would expect from opening markets. What was unexpected was that the benefits didn't just come from lower costs of trade and the exposure to competition from foreign producers. In fact, the biggest gains came from a fundamental change in the relationship between producers and retailers. In particular, Wal-mart (or Walmex as it is called in Mexico) increased the productivity and market share of the Mexican SDS industry.