Working Paper: NBER ID: w19308
Authors: Jan De Loecker; Pinelopi Koujianou Goldberg
Abstract: In this article we introduce an empirical framework to analyze how firm performance is affected by increased globalization. Using this framework we discuss recent work on measuring the impact of various shocks firms face in the global marketplace, such as reductions in trade costs (through lowering tariffs and abolishing quotas). Our analytical framework nests most empirical approaches to estimating the impact of trade and industrial policies on firms active in international markets. We identify outstanding issues surrounding the identification of the underlying mechanisms and conclude with suggestions for future research.
Keywords: Globalization; Firm Performance; Trade Liberalization; Productivity
JEL Codes: D22; D40; F10; L1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased globalization (F69) | improved firm performance (L25) |
| trade liberalization (F13) | increased competition (L13) |
| increased competition (L13) | enhanced physical efficiency (H21) |
| increased competition (L13) | reduced inefficiencies (D61) |
| increased competition (L13) | improved management practices (Q15) |
| changes in input tariffs (F16) | lower input prices (D41) |
| lower input prices (D41) | affected markups (D43) |
| lower input prices (D41) | affected overall profitability (F69) |
| input tariff liberalization (F13) | lower input prices (D41) |
| input tariff liberalization (F13) | affected overall profitability (F69) |
| output tariff liberalization (F13) | affected overall profitability (F69) |