THE INFLUENCES OF FOREIGN DIRECT INVESTMENTS, INTRAFIRM TRADING, AND CURRENCY UNDERVALUATION ON U.S. FIRM TRADE DISPUTES
January 2014
Working Paper Number:
CES-14-04
Abstract
We use the case of a puzzling decline in U.S. firm antidumping (AD) filings to explore how firm-level economic heterogeneity within U.S. industries influences political and regulatory responses to changes in the global economy. Firms exhibit heterogeneity both within and across industries regarding foreign direct investment. We propose that firms making vertical, or resource-seeking, investments abroad will be less likely to file AD petitions. Hence, we argue, the increasing vertical FDI of U.S. firms (particularly in countries with undervalued currencies) makes trade disputes far less likely. We use firm level data to examine the universe of U.S. manufacturing firms and find that AD filers generally conduct no intrafirm trade with filed-against countries. Among U.S. MNCs, the number of AD filings is negatively associated with increases in the level of intrafirm trade for large firms. In the context of currency undervaluation, we confirm the existing finding that undervaluation is associated with more AD filings. We also find, however, that high levels of related-party imports from countries with undervalued currencies significantly decrease the numbers of AD filings. Our study highlights the centrality of global production networks in understanding political mobilization over international economic policy. [192]
Document Tags and Keywords
Keywords
Keywords are automatically generated using KeyBERT, a powerful and innovative
keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant
keywords.
By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the
text, highlighting the most significant topics and trends. This approach not only enhances searchability but
provides connections that go beyond potentially domain-specific author-defined keywords.
:
investment,
market,
macroeconomic,
export,
foreign trade,
international trade,
tariff,
exporter,
multinational,
foreign,
country,
economically,
regressors,
gdp,
trading,
firms trade
Tags
Tags are automatically generated using a pretrained language model from spaCy, which excels at
several tasks, including entity tagging.
The model is able to label words and phrases by part-of-speech,
including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are
identified to contain references to specific institutions, datasets, and other organizations.
:
Department of Commerce,
Center for Economic Studies,
National Bureau of Economic Research,
Bureau of Economic Analysis,
Census Bureau Longitudinal Business Database,
Foreign Direct Investment,
Longitudinal Business Database,
World Bank,
Boston Research Data Center,
North American Industry Classification System,
Census Bureau Business Register,
Business Register,
Harmonized System,
European Union,
Longitudinal Firm Trade Transactions Database,
World Trade Organization
Similar Working Papers
Similarity between working papers are determined by an unsupervised neural
network model
know as Doc2Vec.
Doc2Vec is a model that represents entire documents as fixed-length vectors, allowing for the
capture of semantic meaning in a way that relates to the context of words within the document. The model learns to
associate a unique vector with each document while simultaneously learning word vectors, enabling tasks such as
document classification, clustering, and similarity detection by preserving the order and structure of words. The
document vectors are compared using cosine similarity/distance to determine the most similar working papers.
Papers identified with 🔥 are in the top 20% of similarity.
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 PaperImport Competition from and Offshoring to Low-Income Countries: Implications for Employment and Wages at U.S. Domestic Manufacturers🔥
January 2017
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.View Full Paper PDF
-
Working PaperTrade Within Multinational Boundaries🔥
July 2025
Working Paper Number:
CES-25-46
We leverage newly linked data from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis to study transactions within U.S. multinational enterprises (MNEs). We show that using administrative data on intrafirm trade allows us to correct for measurement error in survey data and to identify the positive relationship between input-output (IO) linkages and the probability of trade between U.S. parents and their foreign affiliates. We also document the prevalence of intrafirm trade: more than half (three-quarters) of affiliates worldwide (in North America) export to or import from their U.S. parent. Our findings provide strong empirical support for traditional theories of firm boundaries that predict trade between vertically linked units of the same firm, and underscore the importance of accounting for the trade frictions that shape MNEs' regional supply chains.View Full Paper PDF
-
Working PaperIMPORTING, EXPORTING AND FIRM-LEVEL EMPLOYMENT VOLATILITY
June 2013
Working Paper Number:
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.View Full Paper PDF
-
Working PaperThe Impact of Information and Communication Technology Adoption on Multinational Firm Boundary Decisions
January 2016
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.View Full Paper PDF
-
Working PaperPlant Exit and U.S. Imports from Low-Wage Countries
January 2016
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.View Full Paper PDF
-
Working PaperFirm Finances and Responses to Trade Liberalization: Evidence from U.S. Tariffs on China
November 2021
Working Paper Number:
CES-21-37
This paper examines the relationship between a firm's finances and its response to trade liberalization. Using a landmark change in U.S. tariff policy vis-'-vis Chinese imports and micro level data from the U.S. Census Bureau, I find larger manufacturing job losses in better capitalized firms - those with less leverage and more cash on hand. The effects concentrate in industries where weaker balance sheets are likely to lead to collateral and other borrowing constraints, helping rule out alternative explanations. Finally, domestic manufacturing job losses are not accompanied by greater reductions in sales or aggregate employment, but better capitalized firms do exhibit reduced input costs and increased productivity. These findings point to offshoring as the predominant firm response to trade liberalization and suggest a role for financial capacity in facilitating offshoring investments.View Full Paper PDF
-
Working PaperA Portrait of Firms that Invest in R&D
January 2016
Working Paper Number:
CES-16-41
We focus on the evolution and behavior of firms that invest in research and development (R&D). We build upon the cross-sectional analysis in Foster and Grim (2010) that identified the characteristics of top R&D spending firms and follow up by charting the behavior of these firms over time. Our focus is dynamic in nature as we merge micro-level cross-sectional data from the Survey of Industrial Research and Development (SIRD) and the Business Research & Development and Innovation Survey (BRDIS) with the Longitudinal Business Database (LBD). The result is a panel firm-level data set from 1992 to 2011 that tracks firms' performances as they enter and exit the R&D surveys. Using R&D expenditures to proxy R&D performance, we find the top R&D performing firms in the U.S. across all years to be large, old, multinational enterprises. However, we also find that the composition of R&D performing firms is gradually shifting more towards smaller domestic firms with expenditures being less sensitive to scale effects. We find a high degree of persistence for these firms over time. We chart the history of R&D performing firms and compare them to all firms in the economy and find substantial differences in terms of age, size, firm structure and international activity; these differences persist when looking at future firm outcomes.View Full Paper PDF
-
Working PaperMEASURING 'FACTORYLESS' MANUFACTURING: EVIDENCE FROM U.S. SURVEYS
August 2013
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.View Full Paper PDF
-
Working PaperAre All Trade Protection Policies Created Equal? Empirical Evidence for Nonequivalent Market Power Effects of Tariffs and Quotas
September 2010
Working Paper Number:
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.View Full Paper PDF
-
Working PaperINTRA-FIRM TRADE AND PRODUCT CONTRACTIBILITY
March 2013
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.View Full Paper PDF
