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on International Activities of Firms |
| By: | Gustavo de Souza; Gabriel Garber |
| Abstract: | We study the effect of an innovation subsidy on the long-run growth of firms in a developing country. Using administrative microdata from Brazil and a quasi-experimental design that compares near-winners to near-losers of R&D subsidy applications, we find that the program had a persistent effect on firm size: fourteen years after receiving the subsidy, subsidized firms were 59% larger. The effect is strongest among small and young firms facing high borrowing costs, which is consistent with the subsidy alleviating financial constraints. This growth, however, did not come from firms developing frontier innovations. Instead, firms used the subsidy to expand their product lines into high-tariff markets, producing local versions of foreign goods. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:bcb:wpaper:631 |
| By: | Petre Caraiani; Nazli Karamollaoglu; Cihan Yalcin |
| Abstract: | Using a novel and comprehensive database of Turkish firms that combines the Business Tendency Survey (BTS) with the Company Accounts Statistics, we analyze the determinants of expectation errors of Turkish manufacturing firms. We examine firm expectation errors for various variables, including those related to sales, exports, consumer and producer prices inflation rates. We investigate the impact of various firm characteristics and macroeconomic factors reflecting uncertainty (exchange rate volatility and Chicago Board Options Exchange Volatility Index- CBOE VIX) and monetary policy stance on firms’ absolute expectation errors. Using a fixed effects panel technique, we estimate that macro variables that control for uncertainty or volatility explain expectation errors better than firm-level variables. The rise in the exchange rate volatility and VIX is estimated to be associated with the worsening of the accuracy of expectations. The accuracy of expectations of sales improves with firm size while the accuracy of expectations errors for inflation rates declines with the share of short-term liabilities and liquidity ratio. |
| Keywords: | Expectation errors of firms, Firm heterogeneity, Sales, Exports and inflation rates, Macroeconomic uncertainty and volatility |
| JEL: | E31 D84 E37 G32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2515 |
| By: | Holger Görg, Toshihiro Okubo, Eric Strobl, Maximilian von Ehrlich |
| Abstract: | In this paper we use comprehensive historic firm level data for 1925 to 1938 to estimate productivity spillovers from Japanese textile companies’ affiliates in China (Zaikabo) to local cotton producers in China. We geo-localized firms in order to capture the important role of distance in facilitating productivity spillovers. Our results provide clear evidence for positive productivity spillovers from Zaikabo to local Chinese firms. This goes hand-in-hand with a change in production technology towards greater use of capital (spindles). We also find that spillovers are very localised, being strongest within a radius of up to 10km around the Zaikabo. Furthermore, evidence for spillovers is particularly strong for firms in Shanghai. Our paper is the first to provide evidence for such spillovers from foreign firms in a historical context. |
| JEL: | F23 N65 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ube:dpvwib:dp2506 |
| By: | Agustina Giraudy (American University); Ernesto Stein (Tecnologico de Monterrey); Francisco Urdinez (Pontificia Universidad Católica de Chile); Victor Zuluaga (Banco de México) |
| Abstract: | This paper investigates the impact of the first Trump administration's (2016-2022) US-China Trade War on the sectoral composition and geographic allocation of Chinese foreign direct investment (FDI) in Mexico. Leveraging a novel dataset of Chinese investment projects (2001-2024) and exploiting product-level variation in US tariff exposure, we implement a difference-in-differences design to identify causal effects. The analysis reveals three key findings. First, Chinese firms responded to increased US tariffs by relocating production to Mexico (i.e., nearshoring), with sectors more exposed to the Trade War (that is, receiving larger tariff hikes) having significantly higher Chinese FDI inflows. Second, these effects emerge with a lag of approximately three to five years following tariff imposition. Third, place-based policies significantly influenced the geography of Chinese investment: Mexico's Zona Libre de la Frontera Norte program altered the relative attractiveness for Chinese FDI of the affected regions compared to others. The findings highlight how global trade disputes interact with place-based policies to shape investment patterns, offering lessons for developing economies seeking to attract nearshoring FDI while balancing employment and regional development objectives |
| Keywords: | Foreign Direct Investment, Trade War, Nearshoring, Mexico, China, Place-based Policy |
| JEL: | F13 F14 F21 F23 O19 P33 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:gnt:wpaper:11 |
| By: | Ioan Achim Balaban (Venice School of Management, Università Ca' Foscari Venice); Valentina Fava (Venice School of Management, Università Ca' Foscari Venice) |
| Abstract: | This article examines the failures of FIAT to establish industrial cooperation in the automotive field with Romania in the early 1970s, drawing on the historical archives of the FIAT Group. The article argues that the failure of negotiations in 1973 to produce a FIAT model in communist Romania was related to the Romanian desire to export half of the production to Western Europe through FIAT's foreign distribution network. FIAT refused because it feared that the poor quality of the FIATs produced in Romania would damage the brand. The other reason for FIAT's refusal to partner with Bucharest was concern that a Romanian export deal would upset FIAT's car manufacturing agreements with Yugoslavia and Poland, as both countries would demand similar export deals. Given the experience of Renault and Citroën in Romania in the 1970s and 1980s, FIAT made the right decision to reject Bucharest's offer of a partnership through the establishment of a mixed-capital joint venture. For Romania, however, the failure of the negotiations with FIAT was a major blow to its emerging foreign economic policy based on partnerships with Western non-financial companies. The Romanian/Citroen deal was the result of the failed FIAT deal. |
| Keywords: | FIAT; Romania; car industry; Détente; Romania balance of payments; car exports |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:vnm:wpdman:219 |