Unilateral trade reform, Market Access and Foreign Competition: the Patterns of Multi-Product Exporters
Year: 2011
Type: preprint
Abstract: Recent findings in international trade using detailed firm level surveys emphasize the microeconomic effects of trade liberalization episodes. A unilateral trade reform has two opposite effects on firms ’ export patterns: (i) expansion of export opportunities for foreign firms exporting to that destination and (ii) intensification of foreign competition in the liberalized market. The main contribution of this paper is to investigate this trade-off between market access growth and the strengthening of competitive pressures. Using detailed firm-product-destination data for French firms (1999-2005), we explore how the margins of French exports react to the unilateral trade reform experienced by China at the end of 90s. We exploit the exogenous variation in Chinese import tariff cuts relative to tariff changes of other Asian countries. Our findings suggest that French firms expanded the range of their exported products and the volume of exports to China relative to other Asian destinations after Chinese tariff liberalization. These results are robust when we explicitly account for foreign competition of third countries in the liberalized market. Quantitatively, a 7 percent declined of Chinese tariff on average during the period 1999-2005, results in almost 6 percent expansion of a firm’s export product scope.
Authors: María Bas, Pamela Bombarda
Institution: Université de Cergy-Pontoise
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1545308332