Does Input Tariff Reduction Impact Firms'Exports in the Presence of Import Tariff Exemption Regimes?

39 Pages Posted: 20 Apr 2016

See all articles by Marcio Cruz

Marcio Cruz

World Bank; Federal University of Parana (UFPR) - Departamento de Economia

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia

Date Written: April 6, 2015

Abstract

In the last decade Morocco undertook substantial, if gradual, trade liberalization by reducing tariffs, reforming trade regulations and signing free and preferential trade agreements with several regions and countries, including the United States, Turkey, the European Union and Arab countries. This paper analyzes the impact of input tariff reduction on Moroccan exporting firms through the channel of intermediate goods. Gaining access to more varied and cheaper inputs can make exporting firms more competitive, and as a result they export more. To evaluate how this policy may impact firms' export performance, the paper analyzes the impact of input tariff reduction on different margins of trade with emphasis on export markets and product diversification. The identification of the effect of input tariffs on exports relies on a difference-in-difference estimator using heterogeneous access to import tariff exemption as a measure of different levels of exposure to input tariff reduction at the firm level. Overall, the analysis finds that firms that are relatively more exposed to input tariff perform better in those sectors with the largest input tariff reduction, with better access to markets, higher probability to survive when exporting new products in those sectors and higher export value growth.

Keywords: Rules of Origin, Trade Technology and Productivity, Trade Policy, Trade and Multilateral Issues

Suggested Citation

Cruz, Marcio and Bussolo, Maurizio, Does Input Tariff Reduction Impact Firms'Exports in the Presence of Import Tariff Exemption Regimes? (April 6, 2015). World Bank Policy Research Working Paper No. 7231. Available at SSRN: https://ssrn.com/abstract=2591173

Marcio Cruz (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Federal University of Parana (UFPR) - Departamento de Economia ( email )

Av. Pref. Lothario Meissner, 632
Centro
Curitiba - PR, 80060-000
Brazil

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://https://blogs.worldbank.org/team/maurizio-bussolo

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