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on International Activities of Firms |
| By: | Fabrice Defever; Emanuel Ornelas |
| 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, export entry, China |
| Date: | 2026–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2170 |
| By: | Hiroshi Kumanomido (LMU Munich) |
| Abstract: | Large exchange rate appreciations pose a fundamental challenge for open economies: they compress export margins, weaken competitiveness, and force firms and regions to adjust their production and employment structures. However, evidence on how such adjustments unfold over the long run remains limited. This paper studies these mechanisms using Japan’s sharp yen appreciation following the 1985 Plaza Accord. Combining a firm-level panel data from 1980 to 1999 with industry-level shock exposure, I estimate how appreciation affected firms’ employment, sales, and labor productivity. The results show sharp declines in sales and productivity but modest employment losses, reflecting Japan’s rigid labor practices. Industries more exposed to export shocks expanded FDI in Asia without inducing additional domestic employment adjustment, but leading to a sharper decline in measured labor productivity. At the regional level, labor reallocation from manufacturing to services occurred in shock-exposed regions, suggesting that the yen appreciation led to gradual structural transformation. |
| Keywords: | exchange rate; trade policy; firm; plaza accord; structural transformation; |
| JEL: | F14 F38 F68 |
| Date: | 2026–03–23 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:567 |
| By: | Qayoom Khachoo (Indian Institute of Foreign Trade); Ridwan Ah Sheikh (Indira Gandhi Institute of Development Research); Pritam Banerjee (Indian Institute of Foreign Trade) |
| Abstract: | This study leverages India's Patents (Amendment) Act, 2002, as a quasi-natural experiment within a difference-in-differences framework to examine how domestic reforms related to patents may affect firms' export behavior and their integration to the global value chains. Exploiting a detailed firm-level database covering the universe of Indian manufacturing firms, we find that heightened patent protection is associated with approximately a 18 increase in exports and a 12 increase in total imports among high-tech firms relative to low-tech firms, even including firm, year, and industry-by-year fixed effects. We further show that stronger enforcement of intellectual property rights (IPRs) has a positive impact on firms' imports of intermediate inputs. Specifically, high-tech firms experienced 20 increase in raw-material imports relative to their low-tech counterparts. In contrast, the reform was associated with a significant reduction in imports of spares and stores. While the average treatment effects on capital and final goods imports remain insignificant, event-study estimates suggest positive and statistically significant effects, albeit with a delay. This study provides policy-relevant evidence that stronger IPRs in emerging market economies such as India enhance firms' trade performance by stimulating innovation, promoting technology transfer and adoption, and enabling access to advanced global inputs. |
| Keywords: | IPRs, Exports, Imports, Global value chains, Difference-in-Differences |
| JEL: | F13 F14 O30 O33 O34 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ind:igiwpp:2026-001 |
| By: | Sizhong Sun |
| Abstract: | This paper studies firms' optimal response to a trade liberalization shock in terms of export and product innovation both theoretically and empirically. We find that trade liberalization, namely China's WTO accession, reduces trade cost and promotes export, which in turn incentivizes firms to innovate as the marginal benefit of innovation for exporting firms is higher than that for non-exporting firms. In addition, as a firm starts to innovate, it predicts to have a higher probability of moving to a better productivity state and can save the entry cost of innovation in the future, resulting in additional dynamic benefits. Such an innovation-promotion effect is an unintended consequence of trade liberalization. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.23825 |
| By: | Mayara Felix |
| Abstract: | I estimate the effect of trade on local labor market concentration and its implications for wages using employer-employee linked data and tariff shocks from Brazil’s trade liberalization. Trade increased concentration by 7%, an effect driven by firm exit and worker flows to surviving import-competing firms. Increased concentration reduced wage take-home shares—estimated at 50 cents on the dollar pre-shock—enough to offset small wage gains from reallocation, but did not meaningfully reduce wages on net. Most of the wage declines attributed to Brazil's trade liberalization resulted instead from reductions in the marginal revenue product of labor. Incorporating informality reveals substantial regional heterogeneity. |
| JEL: | F16 O1 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35018 |