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Trade Openness and Vertical Structure: Evidence From Korean Firm-Level Data

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  • Hea-Jung Hyun
  • Jung Hur

Abstract

Recent theories and empirics suggest that trade openness increases production fragmentation across countries. In this paper, we focus on the relationship between trade openness and firms’ choice of vertical structure. We find supportive, firm-level evidence that upon trade liberalization, firms restructure their organization by downsizing their domestic production processes (i.e. domestic vertical disintegration) and relocating their input production plants to other countries (i.e. cross-border vertical integration). Copyright Springer Science+Business Media New York 2014

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  • Hea-Jung Hyun & Jung Hur, 2014. "Trade Openness and Vertical Structure: Evidence From Korean Firm-Level Data," Open Economies Review, Springer, vol. 25(4), pages 701-720, September.
    • Handle: RePEc:kap:openec:v:25:y:2014:i:4:p:701-720
    DOI: 10.1007/s11079-013-9291-7
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    Cited by:

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    2. Tran Manh Ha & Doan Ngoc Thang, 2023. "Economic sanction and global sourcing complexity: A cross‐country analysis," The World Economy, Wiley Blackwell, vol. 46(4), pages 1017-1050, April.

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    More about this item

    Keywords

    Trade openness; Vertical integration; Intra-firm trade; Foreign outsourcing; F23; L22;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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