Trade liberalization, input intermediaries and firm productivity: Evidence from China

Defever, Fabrice; Imbruno, Michele; Kneller, Richard

Abstract

We investigate theoretically and empirically the role of wholesalers in mediating the productivity effects of trade liberalization. Intermediaries provide indirect access to foreign produced inputs. The productivity effects of input tariff cuts on firms that do not directly import therefore depends on the extent that wholesalers are a feature of input supply within an industry. Using firm level data from China, we document that wholesalers play no such role for direct importers. However, other firms experience productivity gains from reducing input tariffs if trade intermediation of foreign inputs within their sector is high. They suffer efficiency losses otherwise.

Citation

Defever, F., Imbruno, M., & Kneller, R. (2020). Trade liberalization, input intermediaries and firm productivity: Evidence from China. Journal of International Economics, 126, Article 103329. https://doi.org/10.1016/j.jinteco.2020.103329

• Journal Article Type: Article
• Acceptance Date: Apr 6, 2020
• Online Publication Date: May 11, 2020
• Publication Date: Sep 1, 2020
• Deposit Date: Apr 7, 2020
• Publicly Available Date: Nov 12, 2021
• Journal: Journal of International Economics
• Print ISSN: 0022-1996
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 126
• Article Number: 103329
• DOI: https://doi.org/10.1016/j.jinteco.2020.103329
• Keywords: Firm heterogeneity; Trade liberalization; Intermediate inputs; Productivity; Intermediaries; China
• Public URL: https://nottingham-repository.worktribe.com/output/4266291
• Publisher URL: https://www.sciencedirect.com/science/article/abs/pii/S0022199618301636?via%3Dihub