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.
This study proposes a novel channel through which trade liberalization may induce innovation through the reduction of trade policy uncertainties (TPU) in destination markets. To verify this linkage, ...we utilize the significant reduction of TPU engendered by China’s accession to the World Trade Organization (WTO) in 2001 as a quasi-natural experiment. We find that reduction in TPU significantly encourages firms’ patent application: firms in sectors with a larger reduction in uncertainty filed more invention patent applications after China’s WTO accession. We also find that firms’ innovation responses to TPU reduction vary by productivity, ownership, exporting status, and the irreversibility of investment.
•Trade liberalization may induce innovation through the reduction of trade policy uncertainty (TPU) in destination markets.•We use the significant reduction of TPU engendered by China's accession to the WTO in 2001 as a quasi-natural experiment.•Firms in sectors with a larger reduction in TPU filed more invention patent applications after China's WTO accession.•Firms' innovation responses vary by productivity, ownership, exporting status, and the irreversibility of investment.
Working Paper No. 21082 This paper examines the importance of buyer-supplier relationships, geography and the structure of the production network in firm performance. We develop a simple model where ...firms can outsource tasks and search for suppliers in different locations. Low search and outsourcing costs lead firms to search more and find better suppliers. This in turn drives down the firm's marginal production costs. We test the theory by exploiting the opening of a high-speed (Shinkansen) train line in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms' buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, consistent with the model.
Trading Barriers Peters, Margaret
2017, 2017., 20170509, 2017-04-10
eBook
Why have countries increasingly restricted immigration even when they have opened their markets to foreign competition through trade or allowed their firms to move jobs overseas? InTrading Barriers, ...Margaret Peters argues that the increased ability of firms to produce anywhere in the world combined with growing international competition due to lowered trade barriers has led to greater limits on immigration.
Peters explains that businesses relying on low-skill labor have been the major proponents of greater openness to immigrants. Immigration helps lower costs, making these businesses more competitive at home and abroad. However, increased international competition, due to lower trade barriers and greater economic development in the developing world, has led many businesses in wealthy countries to close or move overseas. Productivity increases have allowed those firms that have chosen to remain behind to do more with fewer workers. Together, these changes in the international economy have sapped the crucial business support necessary for more open immigration policies at home, empowered anti-immigrant groups, and spurred greater controls on migration.
Debunking the commonly held belief that domestic social concerns are the deciding factor in determining immigration policy,Trading Barriersdemonstrates the important and influential role played by international trade and capital movements.
This book willenable the reader to develop global strategies based on trade information and trade flows analysis.Developing global business strategies in today's competitive and disruptive ...environment calls for greater interaction between the business sector and government. Among the instruments available today are various market analytic tools. These tools, coupled with new business models, not only provide a competitive edge but also becomes a necessity to survive in the global ever changing trade environment.This book concerns everyone dealing with market selection, market strategies, and trade policy. The reader will be able to develop global strategies based on trade information and trade flows analysis. An analysis of the most competitive countries in world trade shows the importance of pro-business policies, access to modern infrastructures, investment in research, and increased productivity. The authors explain how to design practical strategies in a global context, greater competition and uncertainty due to the introduction of new business models.
Recent developments suggest that the international economic order is transitioning away from the Neoliberal Order that has flourished for much of the post-Cold War period toward a new Geoeconomic ...Order. The shift to this new order, which is characterized by a growing 'securitisation of economic policy and economisation of strategic policy', will likely see the rules, norms, and institutions of international trade and investment law undergoing significant change.We expose the differences in the underlying logic of these orders, explore how this shift is being driven by the emerging USA-China tech/trade war, and consider the consequences of this transition for global economic governance.
The Elusive Pro-Competitive Effects of Trade ARKOLAKIS, COSTAS; COSTINOT, ARNAUD; DONALDSON, DAVE ...
The Review of economic studies,
01/2019, Volume:
86, Issue:
1 (306)
Journal Article
Peer reviewed
Open access
We study the gains from trade liberalization in models with monopolistic competition, firm-level heterogeneity, and variable markups. For a large class of demand functions used in the international ...macro and trade literature, we derive a parsimonious generalization of the welfare formula in Arkolakis et al. (2012). We then use both estimates from micro-level trade data and evidence regarding firm-level pass-through to quantify the implications of this new formula. Within the class of models that we consider, our main finding is that gains from trade liberalization predicted by models with variable markups are equal to, at best, and slightly lower than, at worst, those predicted by models with constant markups. In this sense, pro-competitive effects of trade are elusive.
Does international trade make all parties better off? We study the relationship between food security and the international trade of fish and seafood between developing and developed countries. ...Specifically, we look at and discuss the evolution of trade flows – values, quantities, and prices – between developing and developed countries. The picture that emerges suggests that the quantity of seafood exported from developing countries to developed countries is close to the quantity of seafood imported by developing countries from developed countries. What takes place is a quality exchange: developing countries export high-quality seafood in exchange for lower quality seafood.
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