Trade liberalization and heterogeneous firms’ adjustments: evidence from India

Bas, María; Ledezma, Iván

doi:10.1007/s10290-019-00366-x

Cited by 3 publications

(8 citation statements)

References 35 publications

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“…where λ mg G determines the share of market m 's expenditure on sector g ; and Ω G is the set of sectors. 9 The consumption index ( C mg G ) for each sector g in each market m is defined over consumption indices ( C mif F ) for each final good firm f from each production country i :…”

Section: Preferencesmentioning

confidence: 99%

“…, and sets of products exported to each market ( Ω mif K ), we now characterize its optimal exporting decisions. Firm f from production country i chooses the price ( P mik K ) for each product k for each market m within sector g to maximize its profits subject to the downward-sloping demand curve (9) and taking into account the effects of its choices on market price indices:…”

Section: Exporting Decisions For a Given Set Of Locationsmentioning

confidence: 99%

“…Incurring the fixed sourcing cost ( F ij I ) for an additional source country j increases firm supplier access ( Φ ifk ( Ω if NI )) and hence reduces variable unit costs (17) and prices (20). These lower prices in turn imply higher output from the revenue function (9), which makes it more likely that the firm will find it profitable to incur the fixed sourcing costs for another country h ≠ j . Another aspect of this interdependence is between exporting and importing decisions.…”

Section: Optimal Sets Of Locationsmentioning

confidence: 99%

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Global Firms

Bernard

Jensen

Redding

et al. 2018

Journal of Economic Literature

198

109

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Research in international trade has changed dramatically over the last twenty years, as attention has shifted from countries and industries towards the firms actually engaged in international trade. The now-standard heterogeneous firm model posits measure-zero firms that compete under monopolistic competition and decide whether to export to foreign markets. However, much of international trade is dominated by a few “global firms,” which participate in the international economy along multiple margins and account for substantial shares of aggregate trade. We develop a new theoretical framework that allows firms to have large market shares and decide simultaneously on the set of production locations, export markets, input sources, products to export, and inputs to import. Using US firm and trade transactions data, we provide strong evidence in support of this framework's main predictions of interdependencies and complementarities between these margins of firm international participation. Global firms participate more intensively along each margin, magnifying the impact of underlying differences in firm characteristics and increasing their shares of aggregate trade. (JEL D22, F14, F23, L60, R32)

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Section: Preferencesmentioning

confidence: 99%

Section: Exporting Decisions For a Given Set Of Locationsmentioning

confidence: 99%

Section: Optimal Sets Of Locationsmentioning

confidence: 99%

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Global Firms

Bernard

Jensen

Redding

et al. 2018

Journal of Economic Literature

198

109

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show abstract

“…The study also confirmed a positive relationship between trade openness, an institutional factor, to the propensity of firms to internationalise. This finding is consistent with the results from some prior research that confirmed a similar pattern of results (Gwartney et al , 2016; Bas and Ledezma, 2020; Marceta and Bojnec, 2022). The result suggests that a country’s positive attitude towards international trade encourages entrepreneurial ventures’ propensity to expand into foreign markets.…”

Section: Discussionmentioning

confidence: 99%

“…Marceta and Bojnec (2022) equate trade openness to trade liberalisation and argue that it confers advantages on countries seeking to sell their products in foreign markets. Countries that adopt liberal trade policies tend to exhibit greater participation in international trade compared to those with more restrictive policies (Kahiya, 2013; Bas and Ledezma, 2020). Although the existing literature generally associates trade openness with economic growth (Selatan, 2010; Silajdzic and Mehic, 2018), the precise impact on firm internationalisation remains elusive.…”

Section: Literature Review and Development Of Hypothesesmentioning

confidence: 99%

Exploring the link between home country attributes and firms' internationalisation: evidence from GEDI and WEF data

Ndofirepi

2023

RIBS

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Purpose This study aims to examine the degree to which a selection of home country factors affects the proclivity of firms to internationalise. The study also proposes and tests a conceptual model that fuses institutional and resource-based theories to improve our understanding of firm internationalisation. Design/methodology/approach The study uses cross-sectional, national-level secondary data from the 2018 Global Entrepreneurship Development Institute and World Economic Forum data sets on global entrepreneurship and competitiveness indices for 137 countries. The data is analysed using correlation and hierarchical regression analysis to test the hypotheses. Findings The results indicate that national income, institutions, trade openness and availability of risk capital positively influenced firm internationalisation, while home-country networking had an inverse effect. However, home country infrastructure had no statistically significant effect on firm internationalisation. Research limitations/implications The findings highlight the importance of considering home country attributes in understanding the internationalisation of firms. Originality/value This study contributes to the body of knowledge by providing empirical evidence of the role of local factors on the internationalisation of entrepreneurial ventures. It also tests a novel conceptual model that integrates institutional and resource-based theories to explain the nuances of the internationalisation of business ventures globally.

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The impact of trade facilitation on African SMEs’ performance

2023

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Whilst contemporary literature indicates that the business environment (BE) impacts almost all entrepreneurial activities, there are indications that the unique business and institutional setting in Africa (with its challenges and opportunities) and the nature of SMEs (their strengths and weaknesses), among other factors, lead to the context-specific impact of regulations on the performance of African SMEs. Using regressions and propensity score matching methods on a panel of 39,461 firm observations (27 African countries) from the World Bank Enterprise Surveys, we unearthed evidence to suggest that whilst enabling tax administration and business licensing regulations improve SMEs’ performance, trade facilitation impedes African SMEs’ performance. Furthermore, the institutional context of competition (from foreign firms) worsens trade facilitation’s negative impact on African SMEs’ performance. These findings suggest a fine-tuning of BE regulations in African countries. Trade facilitation, for example, must be carefully thought through and implemented in a way to benefit SMEs.

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Trade liberalization and heterogeneous firms’ adjustments: evidence from India

Cited by 3 publications

References 35 publications

Global Firms

Global Firms

Exploring the link between home country attributes and firms' internationalisation: evidence from GEDI and WEF data

The impact of trade facilitation on African SMEs’ performance

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