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on International Activities of Firms |
| By: | Nobuaki YAMASHITA; Shiro ARMSTRONG |
| Abstract: | Using comprehensive trade transaction and firm-level data from 2015-2023, we examine how Australian firms adjusted import patterns following the US-China trade war. Our method compares firms with high versus low exposure to products subject to Trump tariffs in 2018-2019, measured by their pre-war import patterns. We find that highly exposed Australian firms increased their import dependency on Chinese goods in subsequent years. This suggests the US-China trade war paradoxically reinforced rather than reduced Australia's reliance on Chinese imports, contrary to expectations of supply chain diversification amid deteriorating geopolitics. A trade war unleashed by the Trump administration, intended, in part, to diminish China’s global trade position and encourage US allies to diversify their economic relationships away from China, may have had the paradoxical and unintentional effect of deepening Australia’s reliance on Chinese imports. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25117 |
| By: | Meng Yu Ngov; Pierre-Louis Vezina; Trang Thu Tran; Gaurav Nayyar |
| Abstract: | When countries subsidize the production and innovation of green goods, does it make it easier for others to join their value chains? We explore this question using Viet Nam’s solar panel industry as a case study, using firm-to-firm transaction data to map out its value chain. We find that Viet Nam imports solar parts and components at substantially lower prices from subsidizing countries: about 30% cheaper than from non-subsidizing countries and nearly 50% cheaper from China, where all key inputs are subsidized. We also find that Chinese FDI firms - which account for around 75% of exports and 50% of jobs among all solar producers - export solar panels at around 38% cheaper than other solar panel exporters in Viet Nam. Lastly, we find that local suppliers of solar panel parts and components linked to these firms experience positive productivity gains. Together, the results are consistent with subsidy spillovers that operate through cheaper intermediate inputs, transmission of cost advantage through multinational production networks, and productivity spillovers to local firms. |
| Keywords: | global value chains, green subsidies, FDI |
| JEL: | F14 F23 Q42 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:csa:wpaper:2025-14 |
| By: | Jinhu Li (Yale University); Andrew B. Bernard (Dartmouth College and NBER); Teresa C. Fort (Dartmouth College and NBER) |
| Abstract: | This paper studies the role of production location in firm export decisions. We document a set of new facts using a custom-built, geo-located dataset of firms, plants, and customs transactions in China. Exporter firms, defined by their first export transaction, are more likely to have plants in coastal locations at the time of their entry into exporting. They are also more likely to open new plants in coastal locations post-entry. We rationalize these facts in a model where a firmÕs production decisions are guided by location-specific export costs. Estimates of the structural model highlight the importance of lower fixed costs of exporting in coastal regions. A counterfactual exercise shows that a policy to equalize the fixed costs across coastal and non-coastal locations would lead to an increase in the number of exporters and aggregate exports, with gains accruing almost entirely to firms in non-coastal locations. |
| Date: | 2025–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2471r1 |
| By: | Wenyin CHENG; Tao LIANG; Bo MENG; Hongyong ZHANG |
| Abstract: | China is now the world’s largest exporter, with average export prices ranging from only 40% to 60% of those in other countries. This paper examines whether industrial subsidies can explain China’s export performance and global competitiveness. Using firm-level subsidy data and inter-provincial input-output tables with firm ownership information, we measure both direct subsidies and indirect subsidies from upstream industries. Our analysis yields several key findings: (1) Direct subsidies significantly increase both Chinese firms’ probability of exporting (extensive margin) and their export volume (intensive margin), with a larger effect on the intensive margin. (2) Notably, indirect subsidies (especially those from first-tier upstream industries) also play an important role in boosting exports. (3) Both domestic and foreign-invested firms benefit from direct subsidies, though the effects of upstream subsidies vary by firm ownership. (4) Contrary to expectations, subsidies do not lead to lower export prices. Instead, both direct and indirect subsidies are positively associated with product quality, thereby reducing quality-adjusted prices. The mechanism analysis suggests that export growth and quality upgrading are driven by (i) direct subsidies through increased R&D and imported inputs, and (ii) indirect subsidies through domestic intermediate inputs. Overall, the findings indicate that government support may promote quality upgrading and strengthen the global competitiveness of Chinese exporters. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25119 |
| By: | Serrano-Domingo, Guadalupe (Department of Economic Analysis, Faculty of Economics, University of Valencia, Avda dels Tarongers, s/n, Campus dels Tarongers, E-46022 Valencia, Spain.); Requena-Silvente, Francisco (Department of Applied Economics II, Faculty of Economics, University of Valencia, Avda dels Tarongers, s/n, Campus dels Tarongers, E-46022 Valencia, Spain.); María A. Martín-Montaner, Joan (Institute of International Economics, University Jaume I of Castellón, Castellón, Spain.); Raúl Mínguez (Camara de Comercio de España and Universidad Nebrija de Madrid, Spain.) |
| Abstract: | We use a dose-response function to investigate how the level of imports of intermediate inputs affects the level of exports using the universe of Spanish two- way trading manufacturers in the year 2004. First, we find a positive but non- linear import-export nexus. Second, low levels of imports don’t significantly boost exports—but as import levels reach the median range, the positive impact becomes much more pronounced. Third, the impact varies by the level of income of the country-of-origin of imports; the larger effect on total exports is linked to imports coming mainly but not exclusively from high-income countries. Finally, higher imports from high-income countries lead firms to export more to these countries relative to low-income countries while the opposite is not observed. |
| Keywords: | Exports performance, Imports of intermediate inputs, Dose-Response function, Spanish firms |
| JEL: | F14 F23 L25 C14 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eec:wpaper:2516 |
| By: | Han Qiu; Hyun Song Shin; Leanne Si Ying Zhang |
| Abstract: | Nationality-based measurement that consolidates firms according to the nationality of the ultimate parent firm provides new insights on questions of ownership and control that underpin the operation of global value chains. Nationality-based shipment data highlight significant "within-nationality" shipments, especially between entities of the same parent group, revealing a strikingly different picture of global shipments compared with conventional residence-based measures.Foreign subsidiaries operate under two distinct shipment models: the "outpost" model which relies on upstream counterparties from the parent region, common among Asian firms, and the "going-global" model characterised by globally distributed trading partners, prevalent among North American firms. |
| Date: | 2025–12–03 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:118 |
| By: | Usama Jamal (CY Cergy Paris Université, THEMA) |
| Abstract: | Anti-tax avoidance policies aim to curb profit shifting by MNEs, yet their effects on capital costs and economic growth remain a critical question. This study examines the causal impacts of Earnings Stripping Rule (ESR)—a core anti–tax-avoidance measure adopted by more than ninety countries in the last decade—that limits profit shifting through debt channels but increases the cost of debt-financed capital. Using a large panel dataset on global MNE operations and a staggered difference-in-difference design, I compare the real activities of MNEs affected by ESR with those of unaffected groups. I find that ESR effectively reduces profit shifting and tax avoidance but also lowers investments in affected subsidiaries. MNEs offset these declines by reallocating capital and employ-ment toward unconstrained affiliates, primarily abroad. However, as the policy coverage expands across a group’s global footprint, this reallocation shifts from foreign to domes-tic units, closing the international escape margin and raising grouplevel tax liabilities. These findings suggest that international coordination is crucial for designing effective, non-distortionary anti-avoidance policies. |
| Keywords: | Tax Avoidance, Multinational Investment, Profit Shifting |
| JEL: | F23 H25 H26 H32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ema:worpap:2025-16 |