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How Exporting Firms Respond to Technical Barriers to Trade?

Author

Listed:
  • Hu, Cui
  • Lin, Faqin
  • Tan, Yong
  • Tang, Yihong

Abstract

This paper investigates how Technical Barriers to Trade (TBT) affect firm export performance. The implementation of the “Children-Resistance” act (CR act) 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 export cigarette lighters between 2004 and 2008, empirical results show that firms that export to the EU not only adjust their product quality to meet the requirements in the CR act, 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. In addition, while the effect of the CR act on export quality is significant only in the implementation year, its impact on firm-level export scale last longer even after its implementation, which is referred to as a dynamic impact. Lastly, Heterogeneous effect of TBT is also documented.

Suggested Citation

  • Hu, Cui & Lin, Faqin & Tan, Yong & Tang, Yihong, 2017. "How Exporting Firms Respond to Technical Barriers to Trade?," MPRA Paper 80946, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:80946
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    Cited by:

    1. 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.
    2. 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).
    3. 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.
    4. 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).
    5. 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.
    6. DOAN Thi Thanh Ha & ZHANG Hongyong, 2022. "Technical Barriers to Trade, Product Quality and Trade Margins: Firm-level evidence," Discussion papers 22056, Research Institute of Economy, Trade and Industry (RIETI).
    7. 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.
    8. 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.
    9. Shuyao Yang, 2020. "Technical Barriers to Trade and Firms' Export Decisions," CESifo Working Paper Series 8693, CESifo.

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    More about this item

    Keywords

    Technical barriers to trade; Children-Resistant Act; Difference in differences;
    All these keywords.

    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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