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The World Economy is a vital resource for researchers, analysts and policy-advisors interested in trade policy and other open economy issues embracing international trade and the environment, international finance, and trade and development. The journal also considers related areas such as economies in transition and development economics, making The World Economy an essential reference for in-depth knowledge on and up-to-date coverage of international economic relations.
While the role of exports in promoting growth in general, and productivity in particular, has been investigated empirically using aggregate data for countries and industries for a long time, only recently have comprehensive longitudinal data at the firm level been used to look at the extent and causes of productivity differentials between exporters and their counterparts which sell on the domestic market only. This paper surveys the empirical strategies applied, and the results produced, in 54 microeconometric studies with data from 34 countries that were published between 1995 and 2006. Details aside, exporters are found to be more productive than non‐exporters, and the more productive firms self‐select into export markets, while exporting does not necessarily improve productivity.
AbstractIs a firm's ability to export an important determinant of environmental performance? To answer this question, we construct a unique microdata set that merged two rich manufacturing firm‐level data sets for China for 2007. When combining this new data set with well‐received empirical specifications, we found that both export status and export intensity are associated with lower sulphur dioxide (SO2) emissions intensity. In addition to the traditional OLS estimation, we verified this association by using the propensity score matching method. Our findings show that the baseline result still holds. In short, exporters are more environmentally friendly than nonexporters, which is in line with previous evidence reported for developed economies. We further discuss potential mechanisms that explain the observed pattern and show that exporters realise higher abatement efforts compared to nonexporters. This study complements the literature in terms of providing China's microevidence on SO2 abatement efforts. It also serves as a first step towards a better understanding of the impact of trade on the environment, especially in developing countries.
AbstractWhile prior literature on trade liberalisation and the environment has mostly focused on the macroeconomic ramifications, this study explores at the firm level whether and how changes of trade barriers brought about by China's accession to the WTO may impact on its manufacturing firms’ environmental performance. Adopting a difference‐in‐differences (DID) methodology, we document the effects of tariff reductions on improving firm‐level SO2 emission intensity, and the key corporate strategic decisions responsible for delivering the observed results, with robustness tests covering other major pollutants. In response to trade liberalisation, firms are found to increase labour resources for environmental protection and to improve their production processes to reduce emission intensity. This study contributes to the literature by investigating at the level of the operating firm how output and input tariff reductions may impact on environmental performance and uncovering for the first time the specific actions responsible for the results.
AbstractUsing firm‐level data for Japan, this paper examines the determinants of the export and foreign direct investment (FDI) decision. We contribute to the literature by employing a mixed logit model, i.e. a multinomial logit model with random intercepts and random coefficients, to incorporate any unobserved firm heterogeneity and by paying special attention to the quantitative significance of the determinants. We find that while the impact of productivity on the export and FDI decision is positive and statistically significant, it is economically negligible. The effect of firm size, credit constraints and information spillovers from experienced firms is also small in magnitude. A quantitatively dominant determinant of the export and FDI decision is instead the prior status of firms in terms of internationalisation. In addition, the use of the mixed logit model enables us to find a substantial role of unobserved firm characteristics in internationalisation of the firm. These findings suggest that entry costs to foreign markets, which substantially vary in size across firms, play an important role in the export and FDI decision. In addition, given that the negligible effect of productivity and the dominant effect of prior status appear to be more prominent in Japan than in some other countries, this study helps highlight the uniqueness of Japanese firms.
AbstractIndia's success story in services is well documented at the national level, but similar literature does not exist for India's states. We bridge this gap by studying India's services growth at the sub‐national level. Contrary to earlier commentary on the unsustainability of India's services growth process, our findings suggest that per capita services may be converging across Indian states (this is not true of per capita income); unlike previous studies on India, evidence is provided using both traditional sigma and beta‐convergence measures and advanced panel unit root tests from the recent econometrics literature. A disaggregated analysis of services sectors reveals convergence in railways, public administration and financial services. Finally, a Jensen and Kletzer approach to determine tradability and an additional original methodology provide evidence of most services being ‘traded’ across India's states, suggesting the role of such trade in the services growth story even at the sub‐national level.
Using a Heckman sample selection model estimated using pooled four‐year firm‐level data, this paper explores the export spillovers from the FDI in the cultural, educational and sporting product manufacturing industry of the manufacturing sector in China from 2000 to 2003. The manufacturing sector contributes around 40 per cent of the GDP in the Chinese economy, and the cultural, educational and sporting product manufacturing industry has a significant proportion of FDI activities, and firms in this sector are active in exporting. Through the empirical exercise, we find that there exist export spillovers from FDI in the industry, for which the magnitude depends on firms’ geographical location, sale cost and revenue ratio, and ownership structure. On average, domestic firms located in Western China suffer from a foreign presence, irrespective of whether they are privately owned or state and collectively owned. For firms in Central China, both the privately owned and state and collectively owned firms appear to benefit from foreign presence. Regarding firms located in Coastal China, the privately owned firms suffer from the foreign presence, while in contrast the state and collectively owned firms benefit from the foreign presence. In addition, in this industry there are more firms that benefit from the presence of FDI than those that suffer, which to some extent justifies the government's policy to attract the FDI inflow.