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Trade liberalization, input intermediaries and firm productivity: Evidence from China

Author

Listed:
  • Fabrice Defever

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - ULCO - Université du Littoral Côte d'Opale - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Michele Imbruno
  • Richard Kneller

Abstract

We investigate theoretically and empirically the role of wholesalers in mediating the productivity effects of trade liberalization. Intermediaries provide indirect access to foreign produced inputs. The productivity effects of input tariff cuts on firms that do not directly import therefore depends on the extent that wholesalers are a feature of input supply within an industry. Using firm level data from China, we document that wholesalers play no such role for direct importers. However, other firms experience productivity gains from reducing input tariffs if trade intermediation of foreign inputs within their sector is high. They suffer efficiency losses otherwise.

Suggested Citation

  • Fabrice Defever & Michele Imbruno & Richard Kneller, 2020. "Trade liberalization, input intermediaries and firm productivity: Evidence from China," Post-Print hal-03128838, HAL.
    • Handle: RePEc:hal:journl:hal-03128838
    DOI: 10.1016/j.jinteco.2020.103329
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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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