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on International Trade |
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Issue of 2025–08–18
23 papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Rodolfo G. Campos (Banco de España); Mario Larch (UNIVERSITY OF BAYREUTH, CEPII, IFO, CESIFO AND GEP); Jacopo Timini (Banco de España); Elena Vidal (Banco de España AND OECD); Yoto V. Yotov (DREXEL UNIVERSITY AND CESIFO) |
| Abstract: | The World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT), are key institutions of the multilateral trading system. While the WTO is generally assumed to promote trade by reducing tariffs and non-tariff barriers, existing estimates of its effect on trade vary widely in magnitude, sign, and significance. We collected 2, 547 estimates from 71 papers and applied meta-analysis techniques to conduct a systematic quantitative review of the literature, complementing it with established advances in gravity models to obtain estimates of the WTO’s impact on trade. The meta-analysis shows that, on average, the literature finds a significant and positive trade effect of the WTO, although the estimates depend strongly on study characteristics. Moreover, we find no evidence of publication bias. Our structural gravity estimates confirm these findings: the WTO increases trade. However, the effects are heterogeneous across sectors and income levels of trading partners. |
| Keywords: | World Trade Organization, trade, gravity model, meta-analysis |
| JEL: | C83 F13 F14 F15 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2427 |
| By: | Yunus Emre Karagulle (Center for Agricultural Trade, Department of Agricultural and Applied Economics, Virginia Tech); Charlotte Emlinger (CEPII, Paris, France); Jason H. Grant (Center for Agricultural Trade, Department of Agricultural and Applied Economics, Virginia Tech) |
| Abstract: | How much do non-tariff measures (NTMs) affect U.S. agricultural exports? While countries maintain a large and diverse set of NTMs to safeguard the health of plants, animals, and humans, policymakers and regulatory bodies may neglect the impact these measures have on international trade. This paper evaluates the impact of two broad types of NTMs important to U.S. food and agricultural exports: sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs). We construct a new database detailing the more prominent SPS and TBT measures impacting U.S. exports as highlighted in the Office of the United States Trade Representative's (USTR) National Trade Estimate (NTE) report from 2007 to 2021. Using a theoretically consistent gravity equation, we find that SPS and TBT measures reduce U.S. agricultural exports by 34.5%, on average, equivalent to a 16.4% ad valorem tariff. However, we find little evidence that these NTMs significantly affect the probability of U.S. exports or export survival in destination markets (i.e., the probability of export failure) suggesting that these measures primarily impact variable trade costs and the intensive margin of trade. |
| Keywords: | gravity model; non-tariff measures; sanitary and phytosanitary; technical barriers to trade; U.S. agricultural exports |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:vpi:aaecpp:aaecpp2025-01 |
| By: | Shekhar Aiyar (Johns Hopkins SAIS, Bruegel and NCAER); Davide Malacrino (International Monetary Fund); Andrea F. Presbitero (International Monetary Fund and CEPR) |
| Abstract: | Firms and policy makers are increasingly looking at friend-shoring to make supply chains less vulnerable to geopolitical tensions. We test whether these considerations are shaping FDI flows, using investment-level data on over 300, 000 instances of greenfield FDI between 2003 and 2022. Estimates from a gravity model, which controls for standard push and pull factors, show an economically significant role for geopolitical alignment in driving the geographical footprint of bilateral investments. This result is robust to the inclusion of standard bilateral drivers of FDI—such as geographic distance and trade flows—and the strength of the effect has increased since 2018, with the resurgence of trade tensions between the U.S. and China. Moreover, our results are not limited to greenfield FDI, but hold also for M&As. |
| Keywords: | Foreign direct investment, Geoeconomics, Fragmentation, Political alignment |
| JEL: | F14 F60 I18 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:nca:ncaerw:158 |
| By: | Karsten Mau; Mingzhi (Jimmy) Xu; Yawen Zheng |
| Abstract: | We evaluate how access to international transport infrastructure promotes trade and economic development. Exploiting the gradual unfolding of transcontinental rail freight connections between China and Europe, our empirical findings indicate increasing exports from connected cities, with positive spillovers to neighboring cities and other indicators economic activity. Not all products and cities are equally responsive to new rail export opportunities. We set up a multi-sector heterogeneous firms model with a rich specification of trade costs, in which firms optimize trade costs by choosing alternative transportation modes and routes. Leveraging a unique data set on trade flows between Chinese cities, we calibrate our model to discuss local welfare effects, relying on sufficient statistics that quantify changes in city-level trade costs. We also highlight significant spatial distributional effects of trade infrastructure development. |
| Keywords: | transport infrastructure, trade, regional development, China |
| JEL: | F14 F15 R11 R41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12027 |
| By: | Alexander Lam |
| Abstract: | US trade protectionism is making the economic outlook increasingly uncertain. To assess how consumer prices may respond to tariffs, we examine a tariff episode from 2018 using detailed microdata and the synthetic control method. |
| Keywords: | Inflation and prices; International topics; Recent economic and financial developments; Trade integration |
| JEL: | E3 E30 E31 F1 F10 F13 F14 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocsan:25-18 |
| By: | Enrique Martínez García; Michael Sposi |
| Abstract: | U.S. tariff policy has historically balanced competing goals—revenue, protection and reciprocity. Policy priorities have shifted over time in response to changing economic and political conditions. Using a calibrated general equilibrium model, we illustrate these trade-offs through the lens of tariff Laffer curves. A 70 percent tariff maximizes U.S. revenue only in the absence of retaliation; this optimum falls to 30 percent with reciprocal tariffs. A unilateral 25 percent tariff delivers the largest domestic consumption gains through favorable terms-of-trade effects, though these gains vanish under retaliation. Simulations also show that multilateral retaliatory tariffs can partially offset losses for Mexico and Canada—unless escalation triggers broader trade conflict. The 2018–19 tariff war further illustrates how targeted tariffs distort relative prices and cross-border resource allocation. |
| Keywords: | tariff policy; terms of trade; optimal tariffs; Tariff Laffer Curve; general equilibrium models; U.S. trade history |
| JEL: | F13 F14 F15 H20 C68 F51 |
| Date: | 2025–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:101406 |
| By: | Lorenzo Rotunno; Michele Ruta |
| Abstract: | Recently announced and enacted US tariffs reduce partners’ access to the US market and lead to trade diversion. Impacted countries may respond in (at least) three ways: imposing retaliatory tariffs on the US, resorting to industrial policy to support their producers, and/or signing trade agreements to find new market access opportunities. Relying on a quantitative trade model, we study the trade and welfare implications of these policy responses. Retaliation hurts US exports, can improve the terms of trade, but also creates distortions. Subsidies can expand exports, making up for lost markets in the US, but they are costly, increase distortions especially for the subsidizers, and worsen trade diversion effects that could eventually lead to new tariffs targeting subsidizers. Seeking deeper integration with other partners can help countries expand trade while reducing distortions. Even in presence of US tariffs, real income for the liberalizing countries and the world is higher when partners choose to deepen integration as part of their policy strategy. |
| Keywords: | Tariffs; retaliation; industrial policy; trade agreements |
| Date: | 2025–07–18 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/147 |
| By: | Te Du; Chao Fang; Shuzhong Ma; Lixin Tang; Zhihong Yu |
| Abstract: | The rapid growth of international retail e-commerce has drawn scrutiny to the US de minimis rule, which exempts low-value imports from tariffs. This paper analyzes how the rule shapes the small-value e-commerce trade. We examine whether tariff increases during the 2018–2019 US–China trade war led consumers to substitute toward tariff-exempt e-commerce imports from China. Using proprietary parcel-level data from a major logistics firm, we find that a 10-percentage-point increase in tariffs raised monthly parcel volume by 3% in panel regressions and by 7% in long-difference specifications. These estimates imply that trade-war tariffs increased e-commerce imports by 5.3%–13.5%—substantial, yet modest compared to the spectacular overall ecommerce growth over 2017-2019. The response is stronger in more densely populated ZIP Codes but does not vary by income or race. |
| Keywords: | trade war, de minimis rule, international e-commerce |
| JEL: | F13 L81 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12033 |
| By: | Giancarlo Corsetti; Banu Demir; Beata Javorcik; Banu Demir Pakel; Beata Smarzynska Javorcik |
| Abstract: | Geopolitical fragmentation triggers complex dynamics in international trade. This paper examines the effects of sanctions through the lens of a stylized model and the empirical analysis of Türkiye’s exports to Russia in the aftermath of Western measures imposed on Russia following its invasion of Ukraine in 2022. As sanctions force many exporters to discontinue or reduce their sales in the target country, firms responding to profit opportunities in that market face (i) a rise in the risk of nonpayment, (ii) higher costs of established trading practice, such as making payments in international currencies through international circuits and (iii) reputational risks and the threat of punitive measures, if their trading with the sanctioned country is exposed. We show that, in response to Western sanctions, Turkish firms sharply raised their exports to Russia, charging higher markups and prices, but also increased their reliance on cash- in-advance transactions and invoicing in Turkish liras instead of dollars. In contrast, Turkish affiliates of Western MNCs responded significantly less, if at all, suggesting a desire to avoid reputational costs. For these firms, a back-of-the-envelope calculation points to annualized foregone revenues of $50 million, with a reputational-risk effect equivalent to tariffs of up to 376%. |
| Keywords: | sanctions, trade diversion, dominant currency pricing, producer currency pricing, cash in advance |
| JEL: | F13 F14 F51 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12021 |
| By: | Cícero, Vinicius Curti; Heras-Recuero, Laura |
| Abstract: | We study how a large, exogenous trade shock --- triggered by China’s accession to the WTO in 2001 --- reshaped income, inequality, and import behavior across Brazilian regions. Using a shift-share instrument based on pre-shock export structures, we show that regions more exposed to China’s demand boom experienced increases in income per capita and within-region inequality relative to less exposed areas. These changes, in turn, led to rising import values and a shift in import composition, particularly toward consumption goods and medium- to high-tech manufactured products. To interpret these patterns, we classify goods by necessity and luxury status using Brazilian household survey data and develop a complementary ``demonstration luxury'' classification --- designed to capture status-oriented goods --- based on U.S. consumption patterns. Luxury imports rose most in regions that were initially more unequal or experienced sharper post-shock increases in inequality, consistent with non-homothetic preferences and status-driven consumption. Our findings highlight inequality as a key channel through which trade shocks shape regional import demand in developing economies. |
| Date: | 2025–07–12 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:9kh2g_v1 |
| By: | James E. Anderson; Yoto V. Yotov |
| Abstract: | U.S. President Trump’s emphasis on ‘tariff reciprocity’ has focused public attention on relative height of tariffs as a measure of fairness in trade relations. The importweighted average tariff subsequently used by USTR to rank how protectionist are trading partners is atheoretic and misleading for this purpose. We propose and implement a theory-consistent tariff index that combines thousands of tariff rates into an import volume equivalent uniform tariff. The index: (i) is consistent with the WTO principle that trade relations should aim at reciprocal exchange of market access, and (ii) decomposes neatly into each country’s buyer and seller incidence of tariffs. |
| JEL: | F13 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34052 |
| By: | Davin Chor; Lin Ma |
| Abstract: | How much do contracting frictions between global firms and their suppliers impact country welfare and trade? We answer this by developing a model of global sourcing under partial contractibility, where firm-supplier relationships are exposed to a bilateral holdup problem. Sourcing decisions aggregate into a gravity equation for trade flows by organizational mode (intrafirm vs. arm’s length), which we take to structural estimation. We can then evaluate welfare changes with an extended Arkolakis, Costinot and Rodriguez-Clare (2012) formula that incorporates these contracting frictions. Our counterfactual analysis reveals a sizeable average country welfare gain of 9.2% from eliminating contracting frictions in global sourcing. We further show how accounting for these frictions significantly reshapes quantitative assessments of the welfare gains from trade, including the stakes in a US-China decoupling scenario. |
| JEL: | D23 F1 F12 F15 F40 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34044 |
| By: | Raymond Fisman; Giovanna Marcolongo; Meng Wu |
| Abstract: | We examine the effects of Ukraine’s economic blockade of the anthracite-rich Donbas region, to demonstrate how trade sanctions’ efficacy can be undermined by trade through non-participatory nations. We document that after the blockade was imposed in March 2017, Russia reported a sharp increase in anthracite imports from Ukraine, while Ukraine reported no exports to Russia at all. We interpret this gap in “mirror statistics” as reflecting a shift in Donbas trade through Russia. Concurrently, Ukraine anthracite imports from Russia increased sharply (from near-zero), indicating that some of the increased supply of anthracite in Russia was exported back to Ukraine. We provide suggestive evidence that Russian traders benefited from monopsony rents, buying low-priced anthracite from Donbas while Russia sold anthracite to Ukraine at prices comparable to other export markets. Overall, our findings highlight some of the economic and geographic features that may raise the cost and limit the efficacy of sanctions. |
| JEL: | F14 F51 Q43 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34097 |
| By: | Ernest Liu; David Y. Yang |
| Abstract: | An interconnected world increases economic efficiency while giving certain countries leverage over others. We aim to describe and understand international power stemming from trade. Using an illustrative model of trade with possibilities of bilateral disputes and ex-post hold-ups, we highlight that bilateral asymmetry in import dependence can be a source of coercive power towards one another. We construct the model-implied measure of international power—asymmetric bilateral import dependence, weighted inversely by sectoral trade elasticities — across country pairs over the past 20 years. Combining this measure with comprehensive data on bilateral engagement events and a high-frequency measure of bilateral geopolitical relationships, we examine the consequences and strategic causes of international power. We show two main empirical results. First, increases in international power between countries — which raise the credibility of threats of trade disruptions — induce more bilateral engagement and negotiations. Second, worsened geopolitical relationships — in anticipation of future disputes — prompt countries to build up greater international power through adjusting trade activities. |
| JEL: | F02 F5 P0 P45 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34006 |
| By: | Docquier, Frédéric (LISER); Iandolo, Stefano (University of Salerno); Rapoport, Hillel (Paris School of Economics); Turati, Riccardo (Universitat Autònoma de Barcelona); Vannoorenberghe, Gonzague (Catholic University Louvain) |
| Abstract: | We propose new ways to measure populism, using the Manifesto Project Database (1960-2019) as main source of data. We characterize the evolution of populism over 60 years and show empirically that it is significantly impacted by the skill-content of globalization. Specifically, imports of goods which are intensive in low-skill labor generate more right-wing populism, and low-skill immigration shifts the distribution of votes to the right, with more votes for right-wing populist parties and less for left-wing populist parties. In contrast, imports of high-skill labor intensive goods, as well as high-skill immigration flows, tend to reduce the volume of populism. |
| Keywords: | immigration, populism, globalization, trade |
| JEL: | D72 F22 F52 J61 P00 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18041 |
| By: | Hinz, Julian; Head, Keith; Méjean, Isabelle; Ornelas, Emanuel; Schularick, Moritz |
| Abstract: | Trump's renewed tariffs on traditional allies-including the EU, Canada, Mexico, and Brazil-signal a return to aggressive protectionism, openly disregarding WTO rules and threatening the stability of the global trade system. The authors argue that unilateral retaliation by individual countries is unlikely to be effective; instead, only a coordinated response by a broad coalition of affected nations-such as the EU, Canada, Mexico, Brazil, and South Korea-can exert meaningful economic pressure on the United States. This policy brief proposes that such a joint response should remain WTO-compliant, target politically sensitive sectors of the U.S. economy (including automobiles, pharmaceuticals, and agriculture), and be framed not as punitive, but as a principled defense of the rules-based international trade order. Timely and coordinated action is critical, as further delays risk deepening fragmentation and inflicting long-term damage on the multilateral trading system. |
| Abstract: | Trumps erneute Zolldrohungen gegenüber traditionellen Verbündeten - darunter die EU, Kanada, Mexiko und Brasilien - stellen eine Rückkehr zu einem aggressiven Protektionismus dar, der die Regeln der Welthandelsorganisation (WTO) offen missachtet und die Stabilität des globalen Handelssystems gefährdet. Die Autoren argumentieren, dass einseitige Maßnahmen einzelner Länder kaum wirksam sein dürften; nur eine koordinierte Reaktion einer breiten Koalition betroffener Staaten - etwa der EU, Kanadas, Mexikos, Brasiliens und Südkoreas - kann spürbaren wirtschaftlichen Druck auf die Vereinigten Staaten ausüben. Dieser Policy Brief schlägt eine gemeinsame Antwort vor, die WTO-konform ist, auf politisch sensible Sektoren der US-Wirtschaft abzielt - darunter die Automobil-, Pharma- und Agrarindustrie - und nicht als Strafmaßnahme, sondern als prinzipientreue Verteidigung der regelbasierten internationalen Handelsordnung kommuniziert wird. Zeitnahes und koordiniertes Handeln ist entscheidend, da weitere Verzögerungen das Risiko einer zunehmenden Fragmentierung erhöhen und dem multilateralen Handelssystem langfristigen Schaden zufügen könnten. |
| Keywords: | US trade policy, tariff policy, trade war, free trade, US-Handelspolitik, Zollpolitik, Trump, Handelskrieg, Freihandel |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:323230 |
| By: | Alviarez Vanessa; Fioretti Michele; Kikkawa Ken; Morlacco Monica |
| Abstract: | This paper derives a closed-form expression linking aggregate markups on imported inputs to concentration in a model of firm-to-firm trade with two-sided market power. Our theory extends standard oligopoly insights in two dimensions. First, it reveals that markups increase with exporter concentration and decrease with importer concentration, reflecting the balance of oligopoly and oligopsony forces. Second, it adapts conventional market definitions to reflect rigid trading relationships, yielding new concentration measures that capture competition in firm-to-firm trade. Analysis of Colombian transaction-level import data shows these differences are key to understanding markup dynamics in international trade. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.00345 |
| By: | Hayato Kato (Graduate School of Economics, the University of Osaka; CESifo Research Network.); Kensuke Suzuki (Department of Economics, Clark University; Economic Research Center, Nagoya University.); Motoaki Takahashi (Graduate School of Economics, the University of Osaka.) |
| Abstract: | We examine how tariffs affect sectoral composition and welfare in an economy with nonhomothetic preferences and sectors being complements—key drivers of structural change. Beyond their conventional role in trade protection, tariffs influence industrial structure by altering relative prices and income levels. We qualitatively characterize these mechanisms and use a quantitative dynamic model to show that a counterfactual 20-percentage-point increase in U.S. manufacturing tariffs since 2001 would have raised the manufacturing value-added share by one percentage point and increased welfare by 0.36 percent. However, if all the U.S. trading partners responded reciprocally, U.S. welfare would have declined by 0.12 percent. |
| Keywords: | Ricardian model of trade; Structural transformation; Nonhomothetic preferences; Capital accumulation; Trade war |
| JEL: | F11 F13 O41 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:osk:wpaper:2507 |
| By: | Bickenbach, Frank; Görg, Holger; Liu, Wan-Hsin |
| Abstract: | Trade in services is an important component of international trade and is becoming increasingly more important with growth rates exceeding the rates with which goods trade increases. This is also true in the bilateral U.S. - EU relationship: Trade in services, and especially trade in digitally deliverable services, is a highly important element of the economic relations between the U.S. and the EU. And it is growing much faster than goods trade between the two economies. Despite its importance, trade in services has received much less attention in political and public discussions on the transatlantic trade relationship - even beyond the current narrow focus on the U.S. goods trade deficit. Against this background this policy brief attempts to explore major developing trends over time in EU-U.S. services trade in general and EU-U.S. trade in digitally deliverable services in particular. In addition to services trade, we analyze the development of services supplied by affiliates of U.S. multinationals in the EU and of those supplied by EU affiliates in the U.S. We provide policy suggestions based on data-driven insights derived from the analysis. |
| Abstract: | Der Handel mit Dienstleistungen ist ein wichtiger Bestandteil des internationalen Handels und gewinnt zunehmend an Bedeutung, da seine Wachstumsraten die des Warenhandels übertreffen. Dies gilt auch für die bilateralen Beziehungen zwischen den USA und der EU: Der Handel mit Dienstleistungen, und insbesondere der Handel mit digital erbringbaren Dienstleistungen, ist ein äußerst wichtiger Bestandteil der Wirtschaftsbeziehungen zwischen den USA und der EU. Und er wächst viel schneller als der Warenhandel zwischen den beiden Volkswirtschaften. Trotz seiner Bedeutung hat der Handel mit Dienstleistungen in den politischen und öffentlichen Diskussionen über die transatlantischen Handelsbeziehungen bisher wenig Beachtung gefunden. Vor diesem Hintergrund untersucht dieser Policy Brief die wichtigsten Entwicklungstrends im EU-US-Dienstleistungshandel im Allgemeinen und im EU-US-Handel mit digital erbrachten Dienstleistungen im Besonderen. Zusätzlich zum Handel mit Dienstleistungen analysieren wir die Entwicklung von Dienstleistungen, die von Tochtergesellschaften multinationaler US-Unternehmen in der EU erbracht werden, sowie von Dienstleistungen, die EU-Tochtergesellschaften in den USA anbieten. Die EU sollte darauf dringen, den Dienstleistungshandel zum Teil der laufenden Zoll-Verhandlungen mit den USA zu machen, um den politischen Spielraum für eine Lösung zu erweitern. |
| Keywords: | services trade, trade balance, digitally deliverable services, U.S., EU, Dienstleistungshandel, Handels- und Dienstleistungsbilanz, digital erbringbare Dienstleistungen, USA, EU |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkpb:323206 |
| By: | Emanuel Kohlscheen; Phurichai Rungcharoenkitkul; Dora Xia; Fabrizio Zampolli |
| Abstract: | Tariffs affect economies most directly through trade volume and prices. Tariffs lower output growth everywhere, though the magnitude varies by country and scenario. They also tend to raise inflation, most notably in the imposing countries. Tariffs have indirect effects, including exchange rate shifts, supply chain disruptions, trade diversion and heightened uncertainty. These could worsen growth and inflation effects as well as the policy trade-offs central banks face. If it proves persistent, trade policy uncertainty could depress domestic demand and put global growth at risk. |
| Date: | 2025–08–12 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:110 |
| By: | Rafael Machado Parente; Sandra Baquie; Yueling Huang; Ms. Florence Jaumotte; Jaden Kim; Samuel Pienknagura |
| Abstract: | This paper empirically studies the relationship between industrial policies (IPs) and firm performance, showing it varies by instrument, firm and industry characteristics, value chain position, and time horizon. Consistent with the trade literature, IPs reducing trade barriers are linked to medium term improvements in firm performance. Subsidies discriminating against foreign interests are linked to short term improvements in value added (VA), productivity and payroll, which fade or turn negative in the medium term. Export incentives are linked to short term declines in firm performance followed by medium term gains. These relationships are stronger for young and financially constrained firms compared to older and less financially constrained firms. Industry distortions also matter—IPs are linked to stronger improvements in VA, capital and payroll in the short term when distortions are high. Finally, we find cross-sectoral spillovers: protective IPs targeting upstream sectors are associated with improved outcomes in downstream firms, while those targeting downstream sectors correlate with weaker upstream performance. Cross-sectoral spillovers from trade liberalizing policies are consistently positive and larger in magnitude, regardless of value chain position. |
| Keywords: | Industrial Policies; Firm Performance; Subsidies; Export Incentives; Productivity |
| Date: | 2025–07–18 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/143 |
| By: | Menéndez de Medina, Maria (RS: GSBE MGSoG, Maastricht Graduate School of Governance) |
| Abstract: | Trade worldwide is being reshaped by two major megatrends: advanced digitalization of production and the transition towards environmentally sustainable goods. This chapter examines for the first time the perspective of twin transition export and import diversification within a multi-dimensional economic complexity approach (Nomaler & Verspagen, 2024b, 2024d) and investigate whether this type of productive transformation perpetuates path-dependency processes in 80 countries over 2000-2018. The results suggest that an export/import productive structure based on twin transition products exhibit different economic performance, sustainability, and inequality implications. Productive specialization in these products has been very path-dependent and with a low engagement of developing countries and hence, reinforcing the core-periphery trade division. Furthermore, results suggest that developments in digital and green technological paradigms mainly take place in a selected number of countries that are already highly developed. |
| JEL: | F14 O10 Q01 |
| Date: | 2024–11–21 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2024032 |
| By: | Valerio De Stefano; Maddalena Mula; Manuel Sebastian Mariani; Andrea Zaccaria |
| Abstract: | A rich theoretical and empirical literature investigated the link between export diversification and firm performance. Prior theoretical works hinted at the key role of capability accumulation in shaping production activities and performance, without however producing product-level indicators able to forecast corporate growth. Building on economic complexity theory and the corporate growth literature, this paper examines which characteristics of a firm's export basket predict future performance. We analyze a unique longitudinal dataset that covers export and financial data for 12, 852 Italian firms. We find that firms exporting products typically exported by wealthier countries -- a proxy for greater product sophistication and market value -- tend to experience higher growth and profit per employee. Moreover, we find that diversification outside of a firm's core production area is positively associated with future growth, whereas diversification within the core is negatively associated. This is revealed by introducing novel measures of in-block and out-of-block diversification, based on algorithmically-detected production blocks. Our findings suggest that growth is driven not just by how many products a firm exports, but also by where these products lie within the production ecosystem, at both local and global scales. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.21754 |