Firm Adjustment to Trade Policy Changes in East Asia

26 Pages Posted: 16 Oct 2019

See all articles by Dionisius Ardiyanto Narjoko

Dionisius Ardiyanto Narjoko

Economic Research Institute for ASEAN

Shujiro Urata

Waseda University-Graduate School of Asia-Pacific Studies

Date Written: May 6, 2019

Abstract

Trade and investment liberalization has been one of the key features of economic policy in many developing countries since the 1990s. Research on this subject has consistently produced more evidence on the benefits of globalization; theoretical studies give more attention to what happens within an industry when trade and liberalization occur, while empirical studies confirm the positive impact of trade liberalization. We review some recent studies on the subject of firms in a globalized economy to enable us to understand more about how firms respond to globalization or changes in trade and investment liberalization. We focus on presenting or explaining the underlying mechanisms through which the effects are realized. The studies we summarized generally confirm the positive impact of trade liberalization on productivity or the spectrum of measures reflecting productivity, such as product quality, firm size, or skill intensity. The positive impact goes through various channels, including competition and industry dynamics, exporting and innovation decisions, and production or investment decisions.

Keywords: trade liberalization, investment liberalization, globalization, productivity

JEL Classification: F1, F6, O14, O53

Suggested Citation

Narjoko, Dionisius Ardiyanto and Urata, Shujiro, Firm Adjustment to Trade Policy Changes in East Asia (May 6, 2019). ADBI Working Paper 945, May 2019. Available at SSRN: https://ssrn.com/abstract=3470056 or http://dx.doi.org/10.2139/ssrn.3470056

Dionisius Ardiyanto Narjoko (Contact Author)

Economic Research Institute for ASEAN ( email )

Jakarta
Indonesia

Shujiro Urata

Waseda University-Graduate School of Asia-Pacific Studies ( email )

1-21-1 Nishiwaseda
Shinjuku-ku, Tokyo 169-8050
Japan

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