Trade Liberalization and Investment in Foreign Capital Goods: A Look at the Intensive Margin

Kandilov, Ivan T.; Leblebicioğlu, Aslı; Manghnani, Ruchita

doi:10.1080/1540496x.2019.1694896

Cited by 6 publications

(10 citation statements)

References 27 publications

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“…For firms that do not import any capital, the impact, captured by the capital tariff coefficient, is small and insignificant. In the last column of the table we show results confirming lower capital tariffs increased the share of firms that imported capital, a result consistent with Bas and Berthou (2017) and Kandilov et al (2017). 39 These results indicate that lower capital tariffs raise the relative share of income by allowing firms to use more foreign capital.…”

Section: Firm-specific Mechanismssupporting

confidence: 64%

“…Therefore, their input tariffs are slightly smaller. Results using the input as a share of total value are very similar, but with a smaller level of input and capital tariffs.19 Studies that also make this point includeBas and Berthou (2017) andKandilov et al (2017).…”

mentioning

confidence: 94%

“…However, capital tariffs are embedded into the input tariffs in previous work. Relatedly, Bas and Berthou (2017) and Kandilov et al (2017) look at the decision to import capital goods and the investment in foreign capital goods in India, respectively. The latter finds that investments in foreign capital increase in response to a drop in capital tariffs, which is consistent with our findings that Indian importers are the ones that raise their labor income share the most.…”

Section: Introductionmentioning

confidence: 99%

“…Some of the other papers that argue the exogeneity of the policy changes before 1997, and limit the sample to pre-1997 areGoldberg et al (2009), andDe Loecker et al (2016).16 Topalova and Khandelwal (2011) use a mix of 4 to 5 digit policy measures. However, because we carry out some of our empirical analysis at the 3-digit industry level using data from the Annual Survey of Industries, we aggregate the tariff measures to the 3-digit level to be able to use the same measures consistently through out the paper.17Kandilov et al (2017) also distinguishes between the intermediate input tariffs and capital goods tariffs to study the impact of trade liberalization in India on the investment decisions of firms.…”

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confidence: 99%

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Openness and Factor Shares: Is Globalization Always Bad for Labor?

Weinberger

Leblebicioğlu²

2018

SSRN Journal

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The secular decline in the labor share since the 1980's is a global phenomenon, and a trend that is concurrent with large liberalization episodes worldwide. In this paper we investigate the liberalization episode in India during the 1990's, which has been characterized by large and unexpected changes in trade and foreign investment policies. Contrary to what might be expected given the reduction in the aggregate data, we uncover a trade channel that raises the labor-to-capital relative factor shares in India. Our results reveal access to foreign capital as a new mechanism through which openness affects factor shares. An increase in the variety and share of foreign capital in the capital stock enhances capital-augmenting technology, which in turn raises real wages and the relative labor share. We find capital and R&D intensities, importing status, and the borrowing capacity of the firm to be important determinants of the factor share response to openness. Finally, we identify domestic deregulation policies and credit expansion as potential determinants of the observed decline in the labor share.

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Section: Firm-specific Mechanismssupporting

confidence: 64%

mentioning

confidence: 94%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

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Openness and Factor Shares: Is Globalization Always Bad for Labor?

Weinberger

Leblebicioğlu²

2018

SSRN Journal

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“…The growth was due to increased capital accumulation affected by tariff magnitude. Reductions in the tariffs on capital goods and intermediate inputs led to higher investment in foreign capital goods, whereas reduction in the output tariff resulted in lower investment [4]. A lot of capital accumulation in a country will drive increased productivity of products and services.…”

Section: Introductionmentioning

confidence: 99%

The Role of Natural and Human Resources on Economic Growth and Regional Development: With Discussion of Open Innovation Dynamics

Saleh¹,

Surya

Ahmad

et al. 2020

Journal of Open Innovation: Technology, Market, and Complexity

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Regional economic growth is closely related to the optimization of the use of natural and human resources. This study aims to analyze: (1) The use of natural and human resource potential works as a determinant of the economic growth of Bulukumba Regency; (2) The influence of natural resources, human resources, community culture and regulation on economic growth in Bulukumba Regency. The research method used is a combination of mixed models, namely a combination of quantitative and qualitative approaches. Data was obtained through observation, survey and documentation. The results of the study show that optimizing the use of natural resources without human resource development causes its contribution to economic growth in Bulukumba Regency to be quite low which becomes an obstacle to the acceleration of economic development. The influence of natural resources, human resources, and community culture together has a significant effect on economic growth in Bulukumba Regency with a coefficient of determination 47.2%. This study recommends optimizing resource potential and strengthening human resource capacity through the use of technology and changes in community culture, which will encourage economic growth in Bulukumba Regency, South Sulawesi Province, Indonesia.

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Chinese competition and product variety of Indian firms

Chakraborty

Henry

2019

Journal of Comparative Economics

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Using detailed …rm-product-year data across manufacturing industries in India, and exploiting the exogenous nature of China's entry into the WTO in 2001, we investigate the link between the impact of import penetration from China on the product variety of Indian manufacturing …rms. We …nd: (i) robust and signi…cant e¤ect of product drop, with the e¤ect coming only from competitive pressure in the domestic market; (ii) evidence of product drop or 'creative destruction'is robust only for the lower-half of the size distribution; (iii) …rms drop their peripheral/marginal products and concentrate on the core ones; and (iv) our result is most strong for …rms producing intermediate goods. For an average Indian manufacturing …rm, 10 percentage point increase in India's Chinese share of imports in the domestic market reduces the product scope of …rms by 1.7-4.4%. In contrast, we …nd positive e¤ects on product scope as when …rms are importing intermediate goods. We also …nd evidence of signi…cant productivity e¤ects and within-…rm factor reallocation. Our results are consistent to a battery of robustness checks and IV estimation.

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Trade Liberalization and Investment in Foreign Capital Goods: A Look at the Intensive Margin

Cited by 6 publications

References 27 publications

Openness and Factor Shares: Is Globalization Always Bad for Labor?

Openness and Factor Shares: Is Globalization Always Bad for Labor?

The Role of Natural and Human Resources on Economic Growth and Regional Development: With Discussion of Open Innovation Dynamics

Chinese competition and product variety of Indian firms

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