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How exporting firms respond to technical barriers to trade?

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  • Cui Hu
  • Faqin Lin
  • Yong Tan
  • Yihong Tang

Abstract

This paper investigates how technical barriers to trade (TBTs) affect firm exports. The implementation of the “child‐resistance” decision (CR decision) in the EU offers an ideal quasi‐natural experiment to identify the causal effect of TBTs on firm performance. Using data on Chinese firms that exported cigarette lighters between 2004 and 2010, we show that firms exporting to the EU not only adjust their product quality to meet the requirements in the CR decision, but also upgrade their product quality in other dimensions. However, both the export value and export volume to the EU decline. At the same time, less productive exporters are forced to exit from the EU market. Lastly, heterogeneous effects of the CR decision are documented.

Suggested Citation

  • Cui Hu & Faqin Lin & Yong Tan & Yihong Tang, 2019. "How exporting firms respond to technical barriers to trade?," The World Economy, Wiley Blackwell, vol. 42(5), pages 1400-1426, May.
    • Handle: RePEc:bla:worlde:v:42:y:2019:i:5:p:1400-1426
    DOI: 10.1111/twec.12786
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    1. Li, Haoran & Wan, Xibo & Zhang, Wendong, 2020. "How do Firms Respond to Political Tensions? Evidence from Chinese Food Importers," ISU General Staff Papers 202011250800001118, Iowa State University, Department of Economics.
    2. Yanyun Li & Faqin Lin, 2022. "Beyond tariff evasion: bypass effect of FTAs to circumvent technical barriers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(4), pages 1085-1105, November.
    3. Duc Anh Dang & Vuong Anh Dang, 2021. "The Effects of SPSs and TBTs on Innovation: Evidence from Exporting Firms in Viet Nam," Working Papers DP-2021-16, Economic Research Institute for ASEAN and East Asia (ERIA).
    4. Doan Thi Thanh Ha & Hongyong Zhang, 2022. "Technical Barriers to Trade, Product Quality and Trade Margins: Firm-level Evidence," Working Papers DP-2021-54, Economic Research Institute for ASEAN and East Asia (ERIA).
    5. Hea‐Jung Hyun & Yong Joon Jang, 2022. "Technical regulation and trade: Export quality matters," The World Economy, Wiley Blackwell, vol. 45(5), pages 1447-1476, May.
    6. Shuyao Yang, 2020. "Technical Barriers to Trade and Firms' Export Decisions," CESifo Working Paper Series 8693, CESifo.
    7. Wei, Hao & Tu, Yue & Zhou, Peng, 2023. "Technical barriers to trade and export performance: Comparing exiting and staying firms," Economic Modelling, Elsevier, vol. 126(C).
    8. Xiaodan Hu & Yunhua Tian & Yanping Zhou & Lu Feng, 2021. "How Do China's Importing Firms Respond to Non‐tariff Measures?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(4), pages 89-112, July.
    9. Hu, Cui & Parsley, David & Tan, Yong, 2021. "Exchange rate induced export quality upgrading: A firm-level perspective," Economic Modelling, Elsevier, vol. 98(C), pages 336-348.

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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