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THE INFLUENCES OF FOREIGN DIRECT INVESTMENTS, INTRAFIRM TRADING, AND CURRENCY UNDERVALUATION ON U.S. FIRM TRADE DISPUTES

January 2014

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The 10 most similar working papers to the working paper 'THE INFLUENCES OF FOREIGN DIRECT INVESTMENTS, INTRAFIRM TRADING, AND CURRENCY UNDERVALUATION ON U.S. FIRM TRADE DISPUTES' are listed below in order of similarity.

• Working Paper

  
  
  Import Competition from and Offshoring to Low-Income Countries: Implications for Employment and Wages at U.S. Domestic Manufacturers
  

  January 2017

  Authors: Fariha Kamal, Mary E. Lovely

  Working Paper Number:

  CES-17-31

  Using confidential linked firm-level trade transactions and census data between 1997 and 2012, we provide new evidence on how American firms without foreign affiliates adjust employment and wages as they adapt to import competition from low-income countries. We provide stylized facts on the input sourcing strategies of these domestic firms, contrasting them with multinationals operating in the same industry. We then investigate how changes in firm input purchases from low-income countries as well as domestic market import penetration from these sources are correlated with changes in employment and wages at surviving domestic firms. Greater offshoring by domestic firms from low-income countries correlates with larger declines in manufacturing employment and in the average production workers' wage. Given the negative association, however, the estimated magnitudes are small, even for a narrow measure of offshoring that includes only intermediate goods. Import penetration of U.S. markets from these sources is associated with relatively larger changes in employment for arm's length importing firms, but has no significant correlation with employment changes at firms that do not trade. Given differences in the degree of both offshoring and import penetration, we find substantial variation across industries in the magnitude of changes associated with low-income country imports.
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• Working Paper

  
  
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  CES-13-31

  In this paper, we use detailed trade and transactions data for the U.S. manufacturing sector to empirically analyze the direction and magnitude of the association between firm-level exposure to trade and the volatility of employment growth. We find that, relative to purely domestic firms, firms that only export and firms that both export and import are less volatile, whereas firms that only import are more volatile. The positive relationship between importing and volatility is driven mainly by firms that switch in and out of importing. We also document a significant degree of heterogeneity across trading firms in terms of the duration of time and intensity with which firms trade, the number and type of products they trade and the number and characteristics of their trading partners. We find these factors to play an important role in explaining the differential impact of trading on employment volatility experienced by these firms.
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• Working Paper

  
  
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  January 2016

  Authors: Fariha Kamal, Wenjie Chen

  Working Paper Number:

  CES-16-01

  This paper evaluates the effect of adopting internet-enabled information and communication technology (ICT) adoption on the decision to reorganize production across national borders (foreign boundary decision) by multinational enterprises (MNE). Using a transaction cost framework, we argue that ICT adoption influences foreign boundary decisions by lowering coordination costs both internally and externally for the firm. We propose that the heterogeneity in the technology's characteristics, namely complexity and the production processes' degree of codifiability, moderate this influence. Using a difference-in-differences methodology and exploiting the richness of confidential U.S. Census Bureau microdata, we find that overall ICT adoption is positively associated with greater likelihood of in-house production, as measured by increases in intra-firm trade shares. Furthermore, we find that more complex forms of ICT are associated with larger increases in intra-firm trade shares. Finally, our results indicate that MNEs in industries in which production specifications are more easily codified in an electronic format are less likely to engage in intra-firm relative to arms-length trade following ICT adoption.
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• Working Paper

  
  
  Plant Exit and U.S. Imports from Low-Wage Countries
  

  January 2016

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  Working Paper Number:

  CES-16-02

  Over the past twenty years, imports to the U.S. from low-wage countries have increased dramatically. In this paper we examine how low-wage country import competition in the U.S. influences the probability of manufacturing establishment closure. Confidential data from the U.S. Bureau of the Census are used to track all manufacturing establishments between 1992 and 2007. These data are linked to measures of import competition built from individual trade transactions. Controlling for a variety of plant and firm covariates, we show that low-wage import competition has played a significant role in manufacturing plant exit. Analysis employs fixed effects panel models running across three periods: the first plant-level panels examining trade and exit for the U.S. economy. Our results appear robust to concerns regarding endogeneity.
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  September 2010

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  CES-10-27

  The steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based, over the past decades. This extensive heterogeneity in trade protection provides the opportunity to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Robust to a variety of empirical specifications with U.S. Census data on the population of U.S. steel plants from 1967-2002, we find evidence for significant market power effects for binding quota-based protection, but not for tariff-based protection. There is only weak evidence that antidumping protection increases market power.
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• Working Paper

  
  
  Globalization and Price Dispersion: Evidence from U.S. Trade Flows
  

  March 2010

  Authors: John Tang

  Working Paper Number:

  CES-10-07

  Historically, the integration of international markets has corresponded with decreasing prices for traded goods due to higher competition among suppliers, scale economies, and consumption demand. In recent years, product differentiation and multinational firm pricing behavior across markets and between suppliers make it difficult to assess the degree to which this still occurs. Using a confidential panel dataset comprising the universe of U.S. import trade transactions between 1992 and 2007, this paper explores the change in prices for imported commodities across American trade partners. Overall price dispersion appears to decline, albeit unevenly, over time; nevertheless, there is considerable heterogeneity within commodity groups, geographic regions, and income levels, which may owe to increased product and quality differentiation within commodity categories. Unusually, after controlling for gravity trade factors, trade openness and extensive measures of globalization are positively associated with price dispersion, which suggests a more disaggregated approach both at the commodity and firm level to account for these differences.
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• Working Paper

  
  
  Identifying U.S. Merchandise Traders: Integrating Customs Transactions with Business Administrative Data
  

  September 2020

  Authors: Fariha Kamal, Wei Ouyang

  Working Paper Number:

  CES-20-28

  This paper describes the construction of the Longitudinal Firm Trade Transactions Database (LFTTD) enabling the identification of merchandise traders - exporters and importers - in the U.S. Census Bureau's Business Register (BR). The LFTTD links merchandise export and import transactions from customs declaration forms to the BR beginning in 1992 through the present. We employ a combination of deterministic and probabilistic matching algorithms to assign a unique firm identifier in the BR to a merchandise export or import transaction record. On average, we match 89 percent of export and import values to a firm identifier. In 1992, we match 79 (88) percent of export (import) value; in 2017, we match 92 (96) percent of export (import) value. Trade transactions in year t are matched to years between 1976 and t+1 of the BR. On average, 94 percent of the trade value matches to a firm in year t of the BR. The LFTTD provides the most comprehensive identification of and the foundation for the analysis of goods trading firms in the U.S. economy.
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• Working Paper

  
  
  MEASURING 'FACTORYLESS' MANUFACTURING: EVIDENCE FROM U.S. SURVEYS
  

  August 2013

  Authors: Fariha Kamal, Brent R. Moulton, Jennifer Ribarsky

  Working Paper Number:

  CES-13-44

  'Factoryless' manufacturers, as defined by the U.S. OMB, perform underlying entrepreneurial components of arranging the factors of production but outsource all of the actual transformation activities to other specialized units. This paper describes efforts to measure 'factoryless' manufacturing through analyzing data on contract manufacturing services (CMS). We explore two U.S. firm surveys that report data on CMS activities and discuss challenges with identifying and collecting data on entities that are part of global value chains.
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• Working Paper

  
  
  Firms in International Trade
  

  April 2007

  Authors: J. Bradford Jensen, Andrew Bernard, Peter Schott, Stephen Redding

  Working Paper Number:

  CES-07-14

  Standard models of international trade devote little attention to firms. Yet of the 5.5 million firms operating in the United States in 2000, just 4 percent engaged in exporting, and the top 10 percent of these exporting firms accounted for 96 percent of U.S. exports. Since the mid 1990s, a large number of empirical studies have provided a wealth of information about the important role that firms play in mediating countries' imports and exports. This research, based on micro datasets that track countries' production and trade at the firm level, demonstrates that trading firms differ substantially from firms that solely serve the domestic market. Across a wide range of countries and industries, exporters have been shown to be larger, more productive, more skill- and capital-intensive, and to pay higher wages than non-trading firms.2 Furthermore, these differences exist even before exporting begins. The ex ante 'superiority' of exporters suggests self-selection: exporters are more productive, not as a result of exporting, but because only the most productive firms are able to overcome the costs of entering export markets. It is precisely this sort of microeconomic heterogeneity that grants firms the ability to influence macroeconomic outcomes. When trade policy barriers fall or transportation costs decline, high-productivity exporting firms survive and grow while lower-productivity non-exporting firms are more likely to fail. This reallocation of economic activity across firms raises aggregate productivity and provides a new source of welfare gains from trade. Confronting the challenges posed by the analysis of micro data has shifted the focus of the international trade field from countries and industries towards firms and products. We highlight these challenges with a detailed analysis of how trading firms differ from non-trading firms in the United States. We show how these differences serve as the foundation of a series of recent heterogeneous-firm models that offer new insights into the causes and consequences of international trade. We then introduce a new set of stylized facts that emerge from analysis of recently available U.S. customs data. These transaction-level trade data track all of the products imported and exported by the U.S. firms to all of its trading partners from 1992 to 2000. They show that the extensive margins of trade ' that is, the number of products firms trade as well as the number of countries they trade with ' are central to understanding the well-known role of distance in dampening aggregate trade flows. We conclude with suggestions for further theoretical and empirical research.
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• Working Paper

  
  
  INTRA-FIRM TRADE AND PRODUCT CONTRACTIBILITY
  

  March 2013

  Authors: J. Bradford Jensen, Andrew Bernard, Peter Schott, Stephen Redding

  Working Paper Number:

  CES-13-12

  This paper examines the determinants of intra-firm trade in U.S. imports using detailed country-product data. We create a new measure of product contractibility based on the degree of intermediation in international trade for the product. We find important roles for the interaction of country and product characteristics in determining intra-firm trade shares. Intra- firm trade is high for products with low levels of contractibility sourced from countries with weak governance, for skill-intensive products from skill-scarce countries, and for capital-intensive products from capital-abundant countries.
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