Trade Liberalization, Input Intermediaries and Firm Productivity: Evidence from China

46 Pages Posted: 20 Dec 2019

See all articles by Fabrice Defever

Fabrice Defever

City, University of London

Michele Imbruno

University of Rome I

Richard Kneller

University of Nottingham

Date Written: 2019

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.

Keywords: firm heterogeneity, trade liberalization, intermediate inputs, productivity, intermediaries, China

JEL Classification: F120, F130

Suggested Citation

Defever, Fabrice and Imbruno, Michele and Kneller, Richard, Trade Liberalization, Input Intermediaries and Firm Productivity: Evidence from China (2019). CESifo Working Paper No. 7987. Available at SSRN: https://ssrn.com/abstract=3507258

Fabrice Defever (Contact Author)

City, University of London ( email )

Northampton Square
London, EC1V 0HB
United Kingdom

Michele Imbruno

University of Rome I ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

Richard Kneller

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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