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on International Activities of Firms |
| By: | Alfaro, Laura; Conconi, Paola; Kamal, Fariha; Kroff, Zachary |
| Abstract: | Traditional theories of firm boundaries predict trade between vertically related units of the same firm. Using novel data that combine a comprehensive mapping 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 findings based on survey data on intrafirm trade. Administrative intrafirm records enable correcting measurement errors in survey data, reconciling traditional theories with empirical evidence. |
| Keywords: | Multinational enterprises |
| JEL: | F14 F23 D23 L20 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21063 |
| By: | Defever, Fabrice; Ornelas, Emanuel |
| Abstract: | We study how the end of the quota system for textiles and clothing products in the American and European markets on January 1, 2005, affected China’s exports to third countries, where policy was unchanged. Using a difference-in-differences approach, we find that the number of Chinese firms exporting previously restricted products to third countries increased sharply after quota removal. The expansion involved many private firms that exported to neither US-EU markets before nor after 2005. This indicates that the policy shock enhanced China’s role as an export base. Conversely, protectionist shifts in large economies would likely generate sizeable negative third-market effects. |
| Keywords: | Import quotas; China |
| JEL: | F13 F14 D22 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21231 |
| By: | Borin, Alessandro; Conteduca, Francesco Paolo; Leone, Fabrizio; Mancini, Michele; Zoi, Patrick |
| Abstract: | This paper examines how international trade shocks transmit through domestic supply chains, shaping local economic vulnerabilities. Using detailed firm-to-firm domestic and foreign transaction data, we quantify the direct and indirect exposure of Italian labor markets to two major sources of external risk: imports from China and exports to the United States. We quantify the importance of firms’ domestic and foreign linkages for overall exposure and highlight the critical role of wholesalers and top trading firms within the domestic network in shaping tails risks. Pronounced local disparities in exposure reveal that aggregate trade statistics conceal substantial and uneven regional vulnerabilities. |
| JEL: | F14 R12 L14 F61 R15 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20910 |
| By: | Becker, Sascha O.; Egger, Hartmut; Koch, Michael; Muendler, Marc-Andreas |
| Abstract: | This paper links globalization, worker efficiency, and wage inequality within plants to internal labor market organization. Using German plant-worker data and information on the task content of occupations, we document that larger plants (i) use more occupations, (ii) assign fewer tasks per occupation, and (iii) exhibit greater wage dispersion. We develop a model where plants endogenously bundle tasks into occupations, improving worker-task matching at the cost of higher fixed span-of-control costs. Embedding this into a Melitz framework, we show that trade increases worker efficiency and wage inequality in exporting plants, whereas non-exporting plants experience the opposite effects. Structural estimation and simulations confirm the model’s predictions and point to non-monotonic economy-wide effects. |
| Keywords: | Tasks |
| JEL: | F12 F16 J3 L23 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20860 |
| By: | Flora Bellone (Université Côte d'Azur, CNRS, GREDEG, France); Edwin Fourrier-Nicolaï (Université Côte d'Azur, CNRS, GREDEG, France); Simone Vannuccini (Université Côte d'Azur, CNRS, GREDEG, France) |
| Abstract: | We study how imported input price shocks affect both the intensity and direction of innovation. Using comprehensive French firm-level data combining accounting records, ownership structures, customs transactions and patents over the period 2014-2023, we construct firm-level exposure to input price shocks based on structural breaks in product-level import unit values from non-EU countries, aggregated using a shift-share design. Innovation intensity is measured using priority patent applications, while the direction of innovation is characterized by mapping patents to products and embedding them in a production network to distinguish innovations directly related to affected inputs from those connected through upstream, downstream, or technologically adjacent linkages. We find that input price shocks primarily affect the direction rather than the level of innovation. Exposed firms reallocate innovative activity toward connected technological domains, consistent with network-based directed technological change. This reallocation is strongest among firms at the technological frontier, while smaller and less productive firms adjust more through overall innovation intensity. We provide evidence for specific industries, showing that the shock-innovation impact-response is heterogeneous. We interpret our results as firms' resorting to what we label defensive innovation. Our findings can inform policy making and firm strategy in a context of increasing trade fragmentation and geopolitical risk. |
| Keywords: | input trade shocks; directed innovation; trade fragmentation; patents |
| JEL: | F14 O31 O33 F18 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2026-17 |
| By: | Hoekman, Bernard; Prosi, Daniel; Sanfilippo, Marco; Ticku, Rohit |
| Abstract: | This paper provides evidence of spillover effects from foreign direct investment (FDI) through forward linkages, a relatively neglected channel to enhance national competitiveness that is likely to become more important as countries seek to bolster domestic competitiveness and resilience to geo-economic shocks. Using granular information on the universe of firm-to-firm transactions and inward FDI in Rwanda, we find substantial and persistent effects on value-added, employment, and productivity of domestic firms after beginning to source from foreign-owned enterprises. These effects are more pervasive than those associated with selling to foreign-owned firms – the backward linkages emphasised in the literature. Suggestive evidence reveals that foreign-owned firms provide higher-quality intermediate inputs than domestic suppliers, particularly in specialized business and professional services that are difficult to import, and that these inputs complement rather than crowd out domestically sourced inputs. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21298 |
| By: | Udo Kreickemeier; Zhan Qu; Florian Unger |
| Abstract: | We develop a two-country general equilibrium model in which heterogeneous firms have access to offshoring and innovation as two alternative ways of reducing production costs. We use our model to answer the question whether better offshoring opportunities lead to more or less innovation at the firm level. We show that switching into offshoring increases firm-level innovation activities when the level of openness of the economy is high, and reduces them if the economy is less open. Via general equilibrium effects, a reduction in offshoring costs unambiguously reduces the innovation activities of non-offshoring firms, whereas innovation in infra-marginal offshoring firms may go up or down. Our paper provides a rationale for contrasting evidence on the relation between offshoring and innovation found in the empirical literature. |
| Keywords: | offshoring, innovation, productivity effect |
| JEL: | F12 O31 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12789 |