EXPORTING AND FIRM PERFORMANCE Atkin, David; Khandelwal, Amit K.; Osman, Adam
The Quarterly journal of economics,
05/2017, Volume:
132, Issue:
2
Journal Article
Peer reviewed
Open access
We conduct a randomized experiment that generates exogenous variation in the access to foreign markets for rug producers in Egypt. Combined with detailed survey data, we causally identify the impact ...of exporting on firm performance. Treatment firms report 16–26% higher profits and exhibit large improvements in quality alongside reductions in output per hour relative to control firms. These findings do not simply reflect firms being offered higher margins to manufacture high-quality products that take longer to produce. Instead, we find evidence of learning-by-exporting whereby exporting improves technical efficiency. First, treatment firms have higher productivity and quality after controlling for rug specifications. Second, when asked to produce an identical domestic rug using the same inputs and same capital equipment, treatment firms produce higher quality rugs despite no difference in production time. Third, treatment firms exhibit learning curves over time. Finally, we document knowledge transfers with quality increasing most along the specific dimensions that the knowledge pertained to.
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MEASURING THE UNEQUAL GAINS FROM TRADE Fajgelbaum, Pablo D.; Khandelwal, Amit K.
The Quarterly journal of economics,
08/2016, Volume:
131, Issue:
3
Journal Article
Peer reviewed
Open access
Individuals that consume different baskets of goods are differentially affected by relative price changes caused by international trade. We develop a methodology to measure the unequal gains from ...trade across consumers within countries. The approach requires data on aggregate expenditures and parameters estimated from a nonhomothetic gravity equation. We find that trade typically favors the poor, who concentrate spending in more traded sectors.
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The production of high-quality goods is often viewed as a precondition for export success and economic development. We provide the first evidence that countries' import tariffs affect the rate at ...which they upgrade product quality. Our analysis uses highly disaggregated data covering exports from 56 countries across 10,000 products to the United States using a novel approach to measure quality. As predicted by distance-to-the-frontier models, we find that lower tariffs are associated with quality upgrading for products close to the world quality frontier, whereas lower tariffs discourage quality upgrading for products distant from the frontier.
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If trade barriers are managed by inefficient institutions, trade liberalization can lead to greater-than-expected gains. We examine Chinese textile and clothing exports before and after the ...elimination of externally imposed export quotas. Both the surge in export volume and the decline in export prices following quota removal are driven by net entry. This outcome is inconsistent with a model in which quotas are allocated based on firm productivity, implying misallocation of resources. Removing this misallocation accounts for a substantial share of the overall gain in productivity associated with quota removal.
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The Return to Protectionism Fajgelbaum, Pablo D; Goldberg, Pinelopi K; Kennedy, Patrick J ...
The Quarterly journal of economics,
02/2020, Volume:
135, Issue:
1
Journal Article
Peer reviewed
Open access
Abstract
After decades of supporting free trade, in 2018 the United States raised import tariffs and major trade partners retaliated. We analyze the short-run impact of this return to protectionism ...on the U.S. economy. Import and retaliatory tariffs caused large declines in imports and exports. Prices of imports targeted by tariffs did not fall, implying complete pass-through of tariffs to duty-inclusive prices. The resulting losses to U.S. consumers and firms that buy imports was $51 billion, or 0.27% of GDP. We embed the estimated trade elasticities in a general-equilibrium model of the U.S. economy. After accounting for tariff revenue and gains to domestic producers, the aggregate real income loss was $7.2 billion, or 0.04% of GDP. Import tariffs favored sectors concentrated in politically competitive counties, and the model implies that tradeable-sector workers in heavily Republican counties were the most negatively affected due to the retaliatory tariffs. JEL Code: F1.
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IZUM, KILJ, NUK, PILJ, SAZU, UL, UM, UPUK
This article studies technology adoption in a cluster of soccer-ball producers in Sialkot, Pakistan. We invented a new cutting technology that reduces waste of the primary raw material and gave the ...technology to a random subset of producers. Despite the clear net benefits for nearly all firms, after 15 months take-up remained puzzlingly low. We hypothesize that an important reason for the lack of adoption is a misalignment of incentives within firms: the key employees (cutters and printers) are typically paid piece rates, with no incentive to reduce waste, and the new technology slows them down, at least initially. Fearing reductions in their effective wage, employees resist adoption in various ways, including by misinforming owners about the value of the technology. To investigate this hypothesis, we implemented a second experiment among the firms that originally received the technology: we offered one cutter and one printer per firm a lump-sum payment, approximately a month’s earnings, conditional on demonstrating competence in using the technology in the presence of the owner. This incentive payment, small from the point of view of the firm, had a significant positive effect on adoption. The results suggest that misalignment of incentives within firms is an important barrier to technology adoption in our setting.
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7.
PRICES, MARKUPS, AND TRADE REFORM De Loecker, Jan; Goldberg, Pinelopi K.; Khandelwal, Amit K. ...
Econometrica,
March 2016, Volume:
84, Issue:
2
Journal Article
Peer reviewed
Open access
This paper examines how prices, markups, and marginal costs respond to trade liberalization. We develop a framework to estimate markups from production data with multi-product firms. This approach ...does not require assumptions on the market structure or demand curves faced by firms, nor assumptions on how firms allocate their inputs across products. We exploit quantity and price information to disentangle markups from quantity-based productivity, and then compute marginal costs by dividing observed prices by the estimated markups. We use India's trade liberalization episode to examine how firms adjust these performance measures. Not surprisingly, we find that trade liberalization lowers factory-gate prices and that output tariff declines have the expected pro-competitive effects. However, the price declines are small relative to the declines in marginal costs, which fall predominantly because of the input tariff liberalization. The reason for this incomplete cost pass-through to prices is that firms offset their reductions in marginal costs by raising markups. Our results demonstrate substantial heterogeneity and variability in markups across firms and time and suggest that producers benefited relative to consumers, at least immediately after the reforms.
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BFBNIB, FZAB, GIS, IJS, INZLJ, KILJ, NLZOH, NMLJ, NUK, OILJ, PNG, SAZU, SBCE, SBMB, UL, UM, UPUK, ZRSKP
Urbanization often occurs in an unplanned and uneven manner, resulting in profound changes in patterns of land cover and land use. Understanding these changes is fundamental for devising ...environmentally responsible approaches to economic development in the rapidly urbanizing countries of the emerging world. One indicator of urbanization is built-up land cover that can be detected and quantified at scale using satellite imagery and cloud-based computational platforms. This process requires reliable and comprehensive ground-truth data for supervised classification and for validation of classification products. We present a new dataset for India, consisting of 21,030 polygons from across the country that were manually classified as "built-up" or "not built-up," which we use for supervised image classification and detection of urban areas. As a large and geographically diverse country that has been undergoing an urban transition, India represents an ideal context to develop and test approaches for the detection of features related to urbanization. We perform the analysis in Google Earth Engine (GEE) using three types of classifiers, based on imagery from Landsat 7 and Landsat 8 as inputs. The methodology produces high-quality maps of built-up areas across space and time. Although the dataset can facilitate supervised image classification in any platform, we highlight its potential use in GEE for temporal large-scale analysis of the urbanization process. Our methodology can easily be applied to other countries and regions.
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Reliable representations of global urban extent remain limited, hindering scientific progress across a range of disciplines that study functionality of sustainable cities. We present an efficient and ...low-cost machine-learning approach for pixel-based image classification of built-up areas at a large geographic scale using Landsat data. Our methodology combines nighttime-lights data and Landsat 8 and overcomes the lack of extensive ground-reference data. We demonstrate the effectiveness of our methodology, which is implemented in Google Earth Engine, through the development of accurate 30m resolution maps that characterize built-up land cover in three geographically diverse countries: India, Mexico, and the US. Our approach highlights the usefulness of data fusion techniques for studying the built environment and is a first step towards the creation of an accurate global-scale map of urban land cover over time.
•An approach is proposed to map built-up land cover at a large geographical scale.•Our data fusion approach utilizes nighttime-lights data and Landsat imagery.•The approach overcomes the lack of extensive ground-reference data for urban research.•Hexagonal tessellation partition improves classification of heterogeneous land cover.•High quality maps of built-up LC are produced for 3 geographically diverse countries.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UL, UM, UPCLJ, UPUK, ZRSKP
This paper documents that intermediaries play an important role in facilitating international trade. We modify a heterogeneous firm model to allow for an intermediary sector. The model predicts that ...firms will endogenously select their mode of export – either directly or indirectly through an intermediary – based on productivity. The model also predicts that intermediaries will be relatively more important in markets that are more difficult to penetrate. We provide empirical confirmation for these predictions using the firm-level census of China's trade, and generate new facts regarding the activity of intermediaries. We also provide evidence that firms begin to export directly after exporting through intermediaries.
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