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Trade liberalization and entrepreneurship: Evidence from China’s WTO accession

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  • Qin, Ni
  • Kong, Dongmin
  • Wang, Qin

Abstract

We investigate the effect of trade liberalization on entrepreneurship. By using China’s World Trade Organization accession as an exogenous shock to conduct a difference-in-differences estimation, we find that trade liberalization has a sizeable positive effect on entrepreneurship. Our findings are robust to different specifications and endogeneity problems. We further discuss the plausible mechanisms driving our results: the trade induced competition, and input market channel. China’s WTO accession may lead to more entrepreneurship in areas with low levels of economic development, a high level of trust, and industries with a low level of external finance dependence.

Suggested Citation

  • Qin, Ni & Kong, Dongmin & Wang, Qin, 2024. "Trade liberalization and entrepreneurship: Evidence from China’s WTO accession," Journal of International Money and Finance, Elsevier, vol. 147(C).
    • Handle: RePEc:eee:jimfin:v:147:y:2024:i:c:s0261560624001426
    DOI: 10.1016/j.jimonfin.2024.103155
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    More about this item

    Keywords

    Trade liberalization; Entrepreneurship; China; Natural experiment;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • G1 - Financial Economics - - General Financial Markets
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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