This paper studies the impact of trade liberalization on productivity. It shows that when intermediate inputs are not highly differentiated, lowering input tariffs leads to a rise in within-firm productivity and wages, and lowering output tariffs has the opposite effect. When intermediate inputs are highly differentiated, the conclusions reverse. These predictions are supported by the data, given by the industrial survey from INEGI (Mexico's Insitituto Nacional de Estadistica Geografia e Informacion) in the period 1984-90. The paper yields estimates for the elasticity of substitution among intermediate inputs, which are useful in determining the direction of the impact of trade liberalization. These estimates can be used to assess the gains from trade liberalization.On the theory side, the closest papers to mine are Halpern et al. (2006) and Kasahara and Rodrigue (2008). In the former, productivity improvement came from the imported intermediate inputs via their better quality and input complementarity. However their model does not tell us how trade policy, in particular tariff reduction, would change the input quality and how many varieties will be added. Also based on the input complementarity, Kasahara and Rodrigue (2008) showed that a higher share of foreign intermediate inputs leads to a larger number of varieties of intermediate inputs, hence boosting the firm's efficiency, but again, there is no discussion about how tariff changes would affect the share of imported inputs, leaving the question of how tariffs affect productivity unanswered.Among the papers that look at the effects of tariffs on productivity, only Schor (2004) and Amiti and Konings (2007) discussed the effects of input tariffs on productivity. This distinction between output and input tariffs proves to be important (Ma and Dei, 2009). My paper contributes to the literature by incorporating these two tariffs into a unified model which explains how these tariffs affect productivity. Depending on which market is liberalized, trade liberalization, which means a reduction in tariffs, can increase or decrease total factor productivity (TFP). Tariff reductions in the intermediate and in the final market always have opposite effects on TFP. Moreover, my paper looks at the interaction between the complementarity force and the diminishing return force, which leads to the result that the impact of trade liberalization depends on the degree of differentiation of intermediate inputs.Since how tariff reduction affects productivity depends on the degree of differentiation, a natural question is how we estimate this parameter. This paper proposes a structural model to estimate the elasticity of substitution. Not many studies in the literature provide these estimates, and they focus on the elasticity of substitution among consumption goods, not intermediate goods. This paper bridges this gap. My estimates are consistent with similar studies (Acemoglu and Ventura, 2002;Broda and Weinstein, 2006;Feenstra, 1994;Hummels and Klenow, 2005). They are both useful in...
The purpose of the article is to evaluate the factors affecting supply chain finance and the influence of supply chain finance on supply chain financing performance and SMEs performance in Vietnam. The study was conducted on 856 small and medium enterprises in Vietnam for 3 consecutive months. The data is processed by Smart PLS 3.3.6 software, the results show that credit quality, supply chain integration, information sharing, and information technology all have a statistically significant impact on supply chain finance. Besides, supply chain finance has a statistically significant impact on supply chain financing performance and SMEs performance. Finally, the innovation capability and the market response capability act as full mediators in the relationship between supply chain finance and supply chain financing performance. Based on the research results, we propose solutions and recommendations to help small and medium enterprises better access capital and improve business performance.
This paper presents theory and evidence from Chinese firm-product data that, given productivity, trade liberalization via input tariff reductions induces an incumbent importer/exporter to increase product markups. This finding calls for a reconsideration of the well-established imports-as-market-discipline hypothesis, which states that a higher volume of imports intensifies competition and hence decreases the market power of a firm. This paper presents further empirical evidence to verify underlying mechanisms behind this finding: input tariff reductions decrease marginal costs, and tariff reduction effects on markup adjustments are more profound among firms of higher import dependence. Moreover, this paper exploits unique features of Chinese data by comparing results for two trade regimes -ordinary trade (wherein firms pay import tariffs to import) and processing trade (wherein firms are not subject to import tariffs). While the aforementioned effects of input-trade liberalization and mechanisms only apply to ordinary trade, processing trade samples are used in a placebo test. The paper also shows that more productive firms charge higher markups for products. These findings are robust to various estimation specifications and alternative markup measures.
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