Trade Liberalization and 'Delocalization': New Evidence from Firm-Level Panel Data

Feinberg, Susan; Keane, Michael P.; Bognanno, Mario F.

doi:10.2307/136490

Cited by 36 publications

(11 citation statements)

References 9 publications

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“…Globerman and Shapiro (1999), using 1950-1995 time series data, conclude that CUSFTA and NAFTA increased in Canada's inward and, especially, outward FDI. Feinberg et al (1998) find that as tariff rates fell, USA multinationals increased their capital and employment in Canada, thus contradicting the view that tariff liberalization would lead to an exit of US firms from Canada. Mirus and Scholnick (1998) suggest trade creation and the FDI enhancing effects of the CUSFTA have prevailed over tariff jumping production.…”

Section: Introductioncontrasting

confidence: 56%

Foreign Direct Investment Liberalization Between Canada and the USA: A CGE Investigation

Mérette

Papadaki²,

Hernández

et al. 2008

Atl Econ J

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Section: Introductioncontrasting

confidence: 56%

Foreign Direct Investment Liberalization Between Canada and the USA: A CGE Investigation

Mérette

Papadaki²,

Hernández

et al. 2008

Atl Econ J

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“…In our own prior work (Feinberg and Keane 1998, 2001), we found substantial heterogeneity in how U.S. MNCs and their Canadian affiliates are organized. Specifically, even within 3‐digit manufacturing industries, we observed considerable variation in MNCs' organization of production prior to liberalization.…”

Section: Introductionmentioning

confidence: 84%

Tariff effects on MNC decisions to engage in intra‐firm and arm's‐length trade

Feinberg

Keane

2009

Canadian J of Economics

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Using confidential firm-level data from the Bureau of Economic Analysis (BEA) on activities of U.S. multinational corporations (MNCs) and their Canadian affiliates, we study the dramatic growth of intra-firm and arm's-length U.S.-Canada trade over the 1984-95 period. We find that decisions to engage in intra-firm and arm's-length trade are essentially unrelated to tariff and transport cost reductions over this sample period. Thus, we find that the increase in trade occurred almost entirely on the intensive rather than the extensive margin. This is consistent with case study evidence in Keane and Feinberg (2006), where MNC executives consistently indicate that the modest tariff reductions of the 1984-95 period were not sufficient to justify fixed costs of overhauling international supply chains. Our results have important implications for recent influential models of international trade that rely on sensitivity of intra-firm trade to tariffs at the extensive margin to explain how small tariff declines could have led to the explosion of intra-firm trade since the 1980s. We also find that initial conditions (i.e., 1983 tariffs) are uncorrelated with whether firms engaged in intra-firm or arm's-length trade activity at the start of the sample period. This result is surprising as it implies that firms/industries with a greater propensity to engage in trade were not, in general, successful at lobbying for more favourable tariff treatment.Les effets des tarifs sur les décisions des firmes plurinationales de s'engager dans le commerce intra-firme et dans le commerceà bout de bras. A l'aide de données confidentielles au niveau de la firme du Bureau of Economic Analysis (BEA)à propos des activités des firmes plurinationales (FPN) américaines et de leurs succursales canadiennes, onétudie la croissance dramatique du commerce USA-Canada tant intra-firme qu'à bout de bras Tariff effects on MNC decisions 901 pour la période 1984-95. Il appert que les décisions de s'engager dans l'un et l'autre commerce sont fondamentalement non-reliées aux réductions des coûts de transport et des tarifs au cours de cette période. On découvre que l'accroissement du commerce s'est produit presqu'entièrementà la marge intensive plutôt qu'à la marge extensive. C'est en ligne avec les résultats de l'étude de cas de Keane et Feinberg (2006) où les cadres des FPN ont systématiquement indiqué que les modestes réductions de tarifs entre 1984 et 1995 n'étaient pas suffisantes pour justifier les coûts fixes impliqués par la modification de leurs chaines de production internationales. Ces résultats ont des implications importantes pour certains modèles influents de commerce international qui sont ancrés dans une sensibilité du commerce intra-firme aux tarifsà la marge extensive pour expliquer comment de faibles chutes de tarifs ont pu engendrer une explosion du commerce intra-firme depuis les années 80. On montre aussi que les conditions initiales (e.g., les tarifs de 1983) ne sont pas coreliées avec le fait que la firme est engagée ou non dans l'un ou l'a...

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“…Since our goal is to focus on whether wages and IR factors have an important impact on FDI, without taking an a priori stand on whether the vertical or horizontal model is most appropriate, we simply include a rather complete set of control variables that might be relevant under one or the other model. Feinberg and Keane (2003) presented an estimable structural model of MNC behavior that guides the reduced form empirical work here (as well as that in Bognanno 1998 andKeane 2001). Their model considers an MNC with an affiliate in a single foreign country.…”

Section: Theoretical and Empirical Literatures On Mnc Behaviormentioning

confidence: 99%

The Influence of Wages and Industrial Relations Environments on the Production Location Decisions of U.S. Multinational Corporations

Bognanno¹,

Keane²,

Yang³

2005

ILR Review

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Using the Benchmark and Annual Surveys of U.S. Direct Investment Abroad collected by the Bureau of Economic Analysis, the authors examine the operations of U.S. multinational corporations (MNCs) in seven manufacturing industries and twenty-two countries over the years 1982-91. They analyze how tariffs, wages, and industrial relations environments influenced U.S. MNCs' decisions about where to locate assets and employment. The results imply that wages and the industrial relations environment were statistically significant determinants of the extent to which MNCs located operations in a particular host country. However, while these factors were important, their impact was much smaller than that of host country market size, which was by far the main determinant of MNC location decisions. Furthermore, the authors find no evidence that tariff reductions increased the share of U.S. MNC activities located abroad. Thus, concerns that tariff reductions may lead to loss of "American jobs" appear to be exaggerated. H ow multinational corporations (MNCs) decide where to locate production has been a subject of considerable interest in recent years. For example, in the debate over the North American Free Trade Agreement (NAFTA), U.S. labor unions and many politicians, as well as some academics, expressed concern that trade liberalization would cause U.S. MNCs to move production facilities from the United States to Mexico, so as to take advantage of lower Mexican wages.1 The basic logic is

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Trade Liberalization and 'Delocalization': New Evidence from Firm-Level Panel Data

Cited by 36 publications

References 9 publications

Foreign Direct Investment Liberalization Between Canada and the USA: A CGE Investigation

Foreign Direct Investment Liberalization Between Canada and the USA: A CGE Investigation

Tariff effects on MNC decisions to engage in intra‐firm and arm's‐length trade

The Influence of Wages and Industrial Relations Environments on the Production Location Decisions of U.S. Multinational Corporations

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