Trade Policy Uncertainty and Exports: Evidence from China's WTO Accession
By Ling Feng, Zhiyuan Li, Deborah L. Swenson. Social Science Research Network, 2017
300 citations recorded by the source corpus.
This paper studies how reduction in trade policy uncertainty affects firm export decisions. Using a firm–product level dataset on Chinese exports to the United States and the European Union in the years surrounding China's WTO accession, we provide strong evidence that reduction in trade policy uncertainty simultaneously induced firm entries to and firm exits from export activity within fine product-level markets. In addition, we uncover accompanying changes in export product prices and quality that coincided with this reallocation: firms that provided higher quality products at lower prices entered the export market, while firms that had higher prices and provided lower quality products prior to the changes, exited. To explain the simultaneous export entries and exits, as well as the fact that new entrants are more productive than exiters, we provide a model of heterogeneous firms which incorporates trade policy uncertainty, tracing the effects of the changes in policy uncertainty on firm-level payoffs and the resulting selection effects.
Subfields: Economics and Econometrics, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/257b4d52c48bb4f4163d3e9128cd80ac1d82b9e7
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Citations in the corpus
- Exporting Out of Agriculture: The Impact of WTO Accession on Structural Transformation in China (2019, unknown): “Recent work has also found that the diminished trade policy uncertainty following China’s WTO accession has boosted patent applications (Liu and Ma, 2016) and stimulated entry into export-oriented production (Feng et al., 2017).”
- Economic policy uncertainty (EPU) and firm carbon emissions: Evidence using a China provincial EPU index (2020, background): “In China’s case, Feng et al. (2017) demonstrated that a decrease in trade policy uncertainty within fine product-level markets could induce firm entries to and firm exits from export activity.”