IDEAS home Printed from https://ideas.repec.org/a/bla/apacel/v40y2026i1p65-75.html

Two‐Sided Effect of Preferential Rules of Origin on Export Resilience of Firms

Author

Listed:
  • Xue Zhenxiang
  • Cui Wenrui

Abstract

The current international political and economic landscape is increasingly complex and volatile, posing significant challenges to firms' export activities. Against this backdrop, enhancing the resilience of firms in the face of export‐related risks has become a critical issue. This study takes preferential rules of origin as its analytical entry point and conceptualises export resilience in terms of two dimensions: risk resistance capacity and risk recovery capacity. The analysis simultaneously considers the negative impact of restrictive preferential rules of origin on export resilience, while also exploring the positive influence of the core functional logic of preferential rules of origin on firms' ability to withstand and recover from external shocks. Empirical results indicate that a one‐unit increase in the restrictiveness of preferential rules of origin leads to a 1.1% improvement in firms' risk resistance capacity but reduces the likelihood of export recovery by 1.7%. Further analysis reveals heterogeneous effects across firm characteristics and contexts. Specifically, the positive impact of preferential rules of origin on risk resistance is more pronounced for large‐scale firms, firms exporting to non‐OECD countries and those located in eastern China. In contrast, the negative impact on risk recovery is more significant for small‐scale firms, firms whose export destinations are non‐OECD countries and those also situated in eastern China. Mechanism analysis suggests that preferential rules of origin enhance firms' risk resistance by strengthening value chain linkages between China and its FTA partners and by boosting technological innovation at the firm level. However, preferential rules of origin also increase firms' export‐related costs, which in turn impede their ability to recover from adverse shocks. This dual effect underscores the nuanced role of preferential rules of origin in shaping export resilience, with both enabling and constraining consequences depending on firm‐specific and contextual factors.

Suggested Citation

  • Xue Zhenxiang & Cui Wenrui, 2026. "Two‐Sided Effect of Preferential Rules of Origin on Export Resilience of Firms," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 40(1), pages 65-75, May.
    • Handle: RePEc:bla:apacel:v:40:y:2026:i:1:p:65-75
    DOI: 10.1111/apel.70002
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/apel.70002
    Download Restriction: no
    File URL: https://libkey.io/10.1111/apel.70002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Julian di Giovanni & Andrei A. Levchenko, 2010. "Putting the Parts Together: Trade, Vertical Linkages, and Business Cycle Comovement," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 95-124, April.
    2. Hayakawa, Kazunobu & Kim, Han-Sung & Yoshimi, Taiyo, 2017. "Exchange rate and utilization of free trade agreements: Focus on rules of origin," Journal of International Money and Finance, Elsevier, vol. 75(C), pages 93-108.
    3. Jun Wang & Chengjuan Liao & Jie Xiong & Chengbo Wang, 2023. "Deepening of Free Trade Agreements and International Trade: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(6), pages 1960-1975, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alessandro Barattieri & Matteo Cacciatore, 2023. "Self-Harming Trade Policy? Protectionism and Production Networks," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 97-128, April.
    2. Auer, Raphael A. & Mehrotra, Aaron, 2014. "Trade linkages and the globalisation of inflation in Asia and the Pacific," Journal of International Money and Finance, Elsevier, vol. 49(PA), pages 129-151.
    3. Erik Frohm & Vanessa Gunnella, 2021. "Spillovers in global production networks," Review of International Economics, Wiley Blackwell, vol. 29(3), pages 663-680, August.
    4. Liao, Wei & Santacreu, Ana Maria, 2015. "The trade comovement puzzle and the margins of international trade," Journal of International Economics, Elsevier, vol. 96(2), pages 266-288.
    5. Nicholas Sly & Caroline Weber, 2015. "Global tax policy and the synchronization of business cycles," Research Working Paper RWP 15-7, Federal Reserve Bank of Kansas City.
    6. Andrei A Levchenko & Jing Zhang, 2013. "The Global Labor Market Impact of Emerging Giants: A Quantitative Assessment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(3), pages 479-519, August.
    7. Alyson C. Ma & Ari Van Assche, 2012. "Is East Asia's Economic Fate Chained to the West?," CIRANO Working Papers 2012s-11, CIRANO.
    8. Lee, Hyun-Hoon & Park, Cyn-Young & Pyun, Ju Hyun, 2024. "International business cycle synchronization: A synthetic assessment," Japan and the World Economy, Elsevier, vol. 69(C).
    9. Richard S. Grossman & Christopher M. Meissner, 2010. "International aspects of the Great Depression and the crisis of 2007: similarities, differences, and lessons," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(3), pages 318-338, Autumn.
    10. Bartesaghi, Paolo & Clemente, Gian Paolo & Grassi, Rosanna & Luu, Duc Thi, 2022. "The multilayer architecture of the global input-output network and its properties," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 304-341.
    11. Mathy, Gabriel P. & Meissner, Christopher M., 2011. "Business cycle co-movement: Evidence from the Great Depression," Journal of Monetary Economics, Elsevier, vol. 58(4), pages 362-372.
    12. Michal FABINGER & Yoko SHIBUYA & TANIGUCHI Mina, 2017. "International Influences on Japanese Supply Chains," Discussion papers 17022, Research Institute of Economy, Trade and Industry (RIETI).
    13. Hakan Yilmazkuday, 2021. "Decomposing the Gains From Trade Through the Standard Gravity Variables," International Economic Journal, Taylor & Francis Journals, vol. 35(1), pages 13-45, January.
    14. Takayuki Mizuno & Takaaki Ohnishi & Tsutomu Watanabe, 2015. "Structure of global buyer-supplier networks and its implications for conflict minerals regulations," Papers 1505.02274, arXiv.org.
    15. Cappariello, Rita & Franco-Bedoya, Sebastian & Gunnella, Vanessa & Ottaviano, Gianmarco I. P., 2020. "Rising protectionism and global value chains: quantifying the general equilibrium effects," LSE Research Online Documents on Economics 108423, London School of Economics and Political Science, LSE Library.
    16. Bilgin, Nuriye Melisa, 2025. "Inflation diffusion through supply chains," International Economics, Elsevier, vol. 184(C).
    17. Levchenko, Andrei A. & Zhang, Jing, 2016. "The evolution of comparative advantage: Measurement and welfare implications," Journal of Monetary Economics, Elsevier, vol. 78(C), pages 96-111.
    18. Patrick Alexander, 2021. "Vertical specialisation and gains from trade," The World Economy, Wiley Blackwell, vol. 44(4), pages 1110-1140, April.
    19. Alexis Anagnostopoulos & Orhan Erem Atesagaoglu & Elisa Faraglia & Chryssi Giannitsarou, 2019. "Foreign Direct Investment as a Determinant of Cross-Country Stock~Market Comovement," Department of Economics Working Papers 19-03, Stony Brook University, Department of Economics.
    20. Luciana Juvenal, Luciana & Santos Monteiro, Paulo, 2010. "Trade and Synchronization in a Multi-Country Economy," CAGE Online Working Paper Series 31, Competitive Advantage in the Global Economy (CAGE).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:apacel:v:40:y:2026:i:1:p:65-75. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://onlinelibrary.wiley.com/journal/14678411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.