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Global Supply Chains, Currency Undervaluation, and Firm Protectionist Demands

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  • J. Bradford Jensen
  • Dennis P. Quinn
  • Stephen Weymouth

Abstract

We examine firm participation in global supply chains to help explain a puzzling decline in protectionist demands in the U.S. despite increased import competition and ongoing currency undervaluation. To explain firm responses to undervaluation, we rely on advances in the international trade literature that uncover intraindustry heterogeneity in firm trade and investment activities. We propose that firm foreign direct investments in, and subsequent related party trade with, countries with undervalued exchange rates will lead to fewer antidumping filings. Examining the universe of U.S. manufacturing firms, we find that antidumping petition filers are more internationally engaged than non-filing peers, but conduct less related party trade with filed-against countries. High levels of related-party imports (arm's length imports) from countries with undervalued currencies significantly decrease (increase) the likelihood of U.S. antidumping petitions. Our study highlights the centrality of global supply chains in understanding political mobilization over international economic policy.

Suggested Citation

  • J. Bradford Jensen & Dennis P. Quinn & Stephen Weymouth, 2013. "Global Supply Chains, Currency Undervaluation, and Firm Protectionist Demands," NBER Working Papers 19239, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19239 Note: ITI
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    Cited by:

    1. Syed Al-Helal Uddin, 2016. "Value-added Trade, Exchange Rate Pass-Through and Trade Elasticity: Revisiting the Trade Competitiveness," 2016 Papers pud11, Job Market Papers.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F5 - International Economics - - International Relations, National Security, and International Political Economy

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