Working Paper: NBER ID: w19239
Authors: J. Bradford Jensen; Dennis P. Quinn; Stephen Weymouth
Abstract: We examine firm participation in global supply chains to help explain a puzzling decline in protectionist demands in the U.S. despite increased import competition and ongoing currency undervaluation. To explain firm responses to undervaluation, we rely on advances in the international trade literature that uncover intraindustry heterogeneity in firm trade and investment activities. We propose that firm foreign direct investments in, and subsequent related party trade with, countries with undervalued exchange rates will lead to fewer antidumping filings. Examining the universe of U.S. manufacturing firms, we find that antidumping petition filers are more internationally engaged than non-filing peers, but conduct less related party trade with filed-against countries. High levels of related-party imports (arm's length imports) from countries with undervalued currencies significantly decrease (increase) the likelihood of U.S. antidumping petitions. Our study highlights the centrality of global supply chains in understanding political mobilization over international economic policy.
Keywords: global supply chains; currency undervaluation; firm protectionism; antidumping filings
JEL Codes: F1; F13; F23; F31; F5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| currency undervaluation (F31) | fewer antidumping filings (F18) |
| foreign direct investment in undervalued currencies (F21) | fewer antidumping filings (F18) |
| high levels of arms-length imports from undervalued countries (F14) | decreased likelihood of US antidumping petitions (F18) |
| investment and sourcing from undervalued currencies (F31) | reduced demands for trade protection (F13) |
| increasing market share of US firms importing from undervalued countries (F14) | complicates organization of coalitions for antidumping petitions (L49) |