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on International Activities of Firms |
| By: | Maczulskij, Terhi |
| Abstract: | Abstract Previous international research suggests a positive association between improved access to trade market and innovation activity. This policy brief summarizes the results from the recent Finnish paper examining how firms’ innovation activity responds to product- and destination-specific export demand shocks in their export markets. I draw on unique administrative data for Finnish manufacturing firms from 1999 onwards, matched with national customs records, patent data, and innovation and R&D surveys. The analysis reveals that positive export demand shocks significantly increase patenting activity and the likelihood of introducing new product innovations, while negative shocks reduce patenting and exports. The study finds that these innovation responses are dynamic, with patent applications rising in the short term and granted patents materializing over longer horizons. Heterogeneity analysis shows that more productive and financially stronger firms benefit disproportionately from export demand expansions. This pattern suggests that financial constraints may limit the ability of firms to adopt new innovations even when export opportunities expand. |
| Keywords: | Export demand shock, Firm-level, Innovation, Manufacturing |
| JEL: | F14 O19 O30 |
| Date: | 2026–01–13 |
| URL: | https://d.repec.org/n?u=RePEc:rif:briefs:171 |
| By: | Mau, Karsten (RS: GSBE other - not theme-related research, Macro, International & Labour Economics); Vicencio , Antonio (RS: GSBE other - not theme-related research, Macro, International & Labour Economics); Xu, Mingzhi; Zheng, Yawen |
| Abstract: | We develop a method to recover a granular, product-level input-output structure from firm-level customs transactions. Building on an association-rule mining algorithm, we exploit systematic co-occurrences between what firms import and what they export to infer input use in production. Applying the approach to data from several countries, we show that the inferred mappings closely resemble conventional input-output relationships and perform well in external validation exercises. We illustrate the value of these linkages in two applications. First, following China's WTO entry, export growth is accompanied by a pronounced rise in imports of the inputs our mapping associates with those exports. Second, in the 2018-2019 U.S.-China trade war, tariffed Chinese exports to the United States contract, and the shock propagates upstream: China's imports of exposed inputs fall, and third-country suppliers that specialize in those inputs experience the declines in their exports to China, especially if China is a key destination market. Overall, simple pattern recognition tools and micro-level trade data can deliver high-resolution input–output linkages that improve exposure measures and empirical assessments of supply-chain propagation. |
| JEL: | C81 L14 F14 F13 O25 |
| Date: | 2026–01–13 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umagsb:2026001 |
| By: | Orhun Ozel |
| Abstract: | This study examines the import intensities of Turkish manufacturing firms following a large exchange rate shock. It focuses on the heterogeneities between exporters and domestic sellers in a difference-in-differences setup. The findings suggest that the exchange rate shock caused significant reductions in the import intensities of the investigated firms. The sudden depreciation affected domestic sellers considerably more than exporters, forcing them to decrease their imports and turn to local alternatives more than exporters. The study further explores the reasons for the differentiation by analyzing various firm characteristics. The results suggest that the difference between domestic sellers and exporters is prevalent for high technology sectors, for firms producing more complex products, and for firms producing lower domestic value-added products. In these groups, exporters do not switch to local alternatives as much as domestic sellers. The decision to switch to domestic alternatives is sensitive to the existence of suitable domestic substitutes for currently imported intermediate inputs, especially for exporters. Drawing on these findings, the paper attempts to make a macro-level inference about the import demand function in Türkiye and arrives at an estimate of 0.51 for the exchange rate elasticity of imports. |
| Keywords: | Trade balance, Import demand function, Exchange rate shock, Difference-in-differences, Heterogeneous firms |
| JEL: | F14 F31 F49 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2518 |
| By: | Laura Alfaro; Paula Conconi; Fariha FK Kamal; Zachary ZK Kroll |
| Abstract: | Traditional theories of firm boundaries predict trade between vertically related units of the same firm. Using novel data that combine a comprehensive map ping of U.S. multinationals’ production networks with their customs filings, we uncover a strong positive relationship between input-output linkages and trade between parents and their affiliates. We also find that intrafirm trade is prevalent, particularly between geographically proximate units: three-quarters of affiliates in North America trade with their U.S. parent. These results overturn prior find ings based on survey data on intrafirm trade. Administrative intrafirm records enable correcting measurement errors in survey data, reconciling traditional the ories with empirical evidence. |
| Keywords: | multinational enterprises; intrafirm trade; input-output linkage |
| JEL: | F14 F23 D23 L20 |
| Date: | 2026–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:eca:wpaper:2013/401477 |
| By: | Yusuf Emre Akgunduz; Gokce Karasoy Can; Elif Ozcan Tok |
| Abstract: | This paper examines the impact of pre-pandemic digitalization investments on pandemic performance, using data from Türkiye. We compare firms that adopted digital technologies before the pandemic with those that did not, employing a coarsened exact matching and difference-in-differences approach. Our first contribution is the development of a novel firm-level digitalization index, constructed using firm-to-firm trade data. The findings show that digitalized firms outperformed their non-digitalized pairs across key metrics, including assets, sales, employment, profitability, and export shares. In particular, digitalized firms have real assets, real sales, and employment that are 3 percent, 5 percent, and 2 percent higher, respectively. The impact of digitalization is even more pronounced in terms of profitability, return on assets, and export share, with higher levels ranging from 0.13 percentage points to 0.50 percentage points. To explain these results, we identify key channels through which digitalization enhanced firm performance which is our second contribution. Specifically, we show that digitalized firms expanded their trade networks—adding more partners and operating over greater distances—reduced labor churn rates, and improved productivity and competitiveness. Digitalization expands market reach, boosting the number of trading partners by 5 percent, while also increasing the average distance to trade partners by 2 percent more than less digitalized firms. |
| Keywords: | Digitalization, COVID-19, Coarsened Exact Matching, differences-in- differences, firm performance |
| JEL: | O33 C55 D22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2602 |
| By: | João Amador; Carlos Melo Gouveia; Ana Catarina Pimenta |
| Abstract: | This paper studies the determinants of exporters’ transport mode choices by combining a simple calibrated model of a profit-maximizing firm with a conditional logit econometric exercise based on very detailed international trade data for Portuguese firms. The paper considers three transport modes – sea, road, and air – and data for the period between 2012 and 2023. The database signals that road transport dominates on short distances, whereas sea and air are preferred for longer routes. Results from model calibration indicate that, for some product–transport mode combinations, longer transit times substantially reduce profits, thus increasing the likelihood of switching transport modes. Empirical results state that the probability of selecting a mode is lower when either transit time or transport costs increase. Product bulkiness, degree of perishability and technological content also affect transport mode selection. In addition, higher unit prices of exported goods shift firms away from sea transport and towards air transport. Simulation exercises using estimated coefficients indicate that a closure of the Suez Canal sizably reduces the probability of choosing a maritime route to Asia, while a one order increase in the price of CO2 emissions would not materially alter the choice of transport mode. |
| JEL: | C35 F14 R41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202517 |
| By: | Lingling, Chen; Bocheng, Peng; He, Leng; Sheetal, Abhishek (The Hong Kong Polytechnic University) |
| Abstract: | This study replicates the instrumental variables (IV) analysis from Morandi Stagni et al. (2021), “A bird in the hand is worth two in the bush: Technology search strategies and competition due to import penetration, ” which examines how import penetration affects firms’ technology search strategies, distinguishing between exploration (new knowledge) and exploitation (refining existing knowledge). We replicate this work to interrogate its assumptions, including the exogeneity of instruments (tariffs and exchange rates) affecting search only through import penetration, the linearity of effects, potential omitted variable bias from domestic confounders (e.g., firm size, R&D intensity, domestic competition), and sample biases toward larger firms due to missing data filters, which may limit generalizability in complex global trade domains. Employing the original IV method in R with publicly available datasets (NBER Patent Data, CRSP-Compustat, and Peter Schott’s trade data) for U.S. manufacturing firms from 1991 to 2006, we yield 5, 076 firm-year observations from 319 firms, closely matching the original after sales adjustments. We extend the analysis using XGBoost machine learning to assess variable importance in a non-linear, multivariate context, excluding tautological variables (e.g., total_cites, patent_stock_lag). The IV replication successfully reproduces the original outcomes: increased import penetration, instrumented by tariffs and exchange rates, significantly reduces technological exploration (mean = 0.038) and increases exploitation (mean = 0.962) across 3, 259 observations with non-zero citations. Surprisingly, the XGBoost extension reveals that import penetration adds minimal predictive power (not in the top 10), with firm fundamentals (e.g., xrd, sale, capx) and domestic competition metrics (total_sim, hhi) dominating rankings—China-specific penetration ranks modestly (#8–#9). This coherently links to the original’s assumptions by highlighting omitted confounders and non-linear interactions that overstate foreign shocks’ causal role, implying domestic and internal drivers primarily shape search strategies in global environments and calling for nuanced policies beyond trade protections. |
| Date: | 2026–01–03 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:m7rzn_v1 |
| By: | Javier Garcia-Bernardo (Charles University, Utrecht University); Petr Janský (Charles University); Gabriel Zucman (Paris School of Economics, Berkeley) |
| Abstract: | The 2017 Tax Cut and Jobs Act lowered the US corporate tax rate and introduced provisions to curb profit shifting. We combine survey data, tax data, and firm financial statements to study the evolution of the geographical allocation of US firms’ profits after the reform. Between 2017 and 2020, the share of profits booked abroad declined by 1–5 percentage points, in part related to repatriations of intellectual property to the US. However, the share of foreign profits booked in tax havens remained stable at around 50%. While aggregated changes in profit allocation are small, a number of firms responded strongly. |
| Keywords: | Multinational corporation; corporate taxation; profit shifting; effective tax rate; country-by-country reporting; Tax Cuts and Jobs Act |
| JEL: | F23 H25 H26 H32 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:042 |