Essays on Firm Performance and International Trade
Open AccessThis dissertation consists of three essays covering different areas of international trade: buyer-seller relationships, trade policy uncertainty and antidumping (AD) restrictions. The first paper examines the relationship between the size of an exporter's already existing clientele in a given area and its impact on the firm's likelihood of finding a new export trading partner (i.e. importer) located in the same vicinity in the next period. I employ comprehensive exporter-importer transaction-level Colombian exports data to the U.S. from 2007 to 2014 to examine this question. The results support the significant role of the network of exporter's client base in generating a first-time match between the same Colombian exporter and a potential U.S. importer. After testing various alternate scenarios that may have a potential driver of my empirical findings of network effects within exporter's clientele, I interpret the results to show that the county effect for the Colombian exporters exists due to learning and reductions in fixed costs of matching. The county effects are stronger if the Colombian exporter is small in size and if the product involved in the buyer-seller transaction is differentiated. The second paper investigates the impact of reduction in trade policy uncertainty in the case of U.S.-Colombia Trade Promotion Agreement (CTPA) on exporter performance. I use two events related to CTPA prior to its implementation, the signing of Labor Action Plan (LAP) and the passage the CTPA bill in the U.S. Congress, and post agreement period to assess the response of Colombian exporters to these episodes of a decline in uncertainty. Using an event study approach, my results reveal that LAP, which was merely a precondition for CTPA, failed to have any impact on Colombian exporter. But, the passing of CTPA legislation, which guaranteed the enforcement of CTPA, had a positive impact on export activity of Colombian exporters. Initially, smaller exporters were quicker in responding to a drop in uncertainty and enjoyed higher cumulative abnormal returns (CAR) in terms of exporter’s performance measures, but the larger exporters adjusted their behavior and experienced higher CAR overtime. In addition, I found evidence for the significance of product heterogeneity, as there existed higher CAR for the Colombian exporter if was dealing with a heterogeneous product.The third chapter delves into the behavior of exporters when they encounter a negative shock from their respective trading partner and study the firm-level effects of Antidumping (AD) on the Chinese exporters. Despite China's entry into the World Trade Organization (WTO), non-tariff barriers such as anti-dumping, are still hurdles on Chinese exporters' path to global trade. Using detailed Chinese firm-level data and Global antidumping database, we find evidence that antidumping (AD) investigations, with positive final AD decision, hurt Chinese exporters' total productivity growth. Our analysis suggests that these detrimental impact on firm’s productivity growth are driven by plummeting firm’s export growth in the face of AD, regardless of the final AD outcome, sharply slowing export growth of non-target products and discouraging the exporter to enter the AD-initiating market.
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