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U.S. Multinationals and Preferential Market Access

Author

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  • Emily Blanchard

    () (Tuck School of Business at Dartmouth College)

  • Xenia Matschke

    () (Universität Trier)

Abstract

We combine firm-level panel data on U.S. foreign affiliate activity with detailed measures of U.S. trade policy to study the relationship between offshoring and preferential market access. Consistent with theory, we find that trade preferences and offshoring activity are positively and significantly correlated. Using instrumental variables, we estimate that a 10% increase in U.S. foreign affiliate exports to the United States is associated with a 4 percentage point increase in the rate of preferential duty-free access. Restricting attention to the Generalized System of Preferences (GSP) among developing countries, this estimate more than triples, relative to the baseline, full sample results.

Suggested Citation

  • Emily Blanchard & Xenia Matschke, 2015. "U.S. Multinationals and Preferential Market Access," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 839-854, October.
  • Handle: RePEc:tpr:restat:v:97:y:2015:i:4:p:839-854
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Pinelopi K. Goldberg & Nina Pavcnik, 2016. "The Effects of Trade Policy," NBER Working Papers 21957, National Bureau of Economic Research, Inc.
    2. Gassebner, Martin & Gnutzmann-Mkrtchyan, Arevik, 2017. "Politicized Trade: What Drives Withdrawal of Trade Preferences?," Hannover Economic Papers (HEP) dp-612, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    3. Blanchard, Emily J., 2015. "A Shifting Mandate: International Ownership, Global Fragmentation, and a Case for Deeper Integration under the WTO," World Trade Review, Cambridge University Press, vol. 14(01), pages 87-99, January.
    4. Emanuel Ornelas, 2016. "Special and Differential Treatment for Developing Countries," CESifo Working Paper Series 5823, CESifo Group Munich.
    5. Paul J. J. Welfens, 2016. "Deriving the new quantity equation: an approach for a closed and an open economy," International Economics and Economic Policy, Springer, vol. 13(4), pages 549-561, October.
    6. repec:eee:ecolet:v:167:y:2018:i:c:p:10-13 is not listed on IDEAS
    7. Adams, Laurel & Régibeau, Pierre & Rockett, Katharine, 2014. "Incentives to create jobs: Regional subsidies, national trade policy and foreign direct investment," Journal of Public Economics, Elsevier, vol. 111(C), pages 102-119.
    8. Kyle Bagwell & Robert W. Staiger, 2016. "The Design of Trade Agreements," NBER Working Papers 22087, National Bureau of Economic Research, Inc.
    9. Bruce A. Blonigen & Matthew T. Cole, 2011. "Optimal tariffs with FDI : the evidence," Working Papers 201121, School of Economics, University College Dublin.
    10. Paul J.J. Welfens, 2015. "Transatlantisches Freihandelsabkommen EU-USA: Befunde zu den TTIP-Vorteilen und Anmerkungen zur TTIP-Debatte," EIIW Discussion paper disbei209, Universitätsbibliothek Wuppertal, University Library.
    11. Osnago,Alberto & Rocha,Nadia & Ruta,Michele, 2015. "Deep trade agreements and vertical FDI : the devil is in the details," Policy Research Working Paper Series 7464, The World Bank.
    12. Ara, Tomohiro & Ghosh, Arghya, 2016. "Tariffs, vertical specialization and oligopoly," European Economic Review, Elsevier, vol. 82(C), pages 1-23.
    13. Nuno Limão, 2016. "Preferential Trade Agreements," NBER Working Papers 22138, National Bureau of Economic Research, Inc.
    14. Blanchard, Emily J., 2014. "What global fragmentation means for the WTO: Article XXIV, behind-the-border concessions, and a new case for WTO limits on investment incentives," WTO Staff Working Papers ERSD-2014-03, World Trade Organization (WTO), Economic Research and Statistics Division.

    More about this item

    Keywords

    U.S. trade policy; offshoring; preferential market access; trade preferences; Generalized System of Preferences; exports; duty-free;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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