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Trade and productivity in formal and informal firms : panel data evidence from Cambodia

Author

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  • Tanaka, Kiyoyasu

Abstract

The impact of trade on productivity is a crucial policy question for development, but prior work predominantly focuses on the formal sector. This paper constructs new panel data on formally registered and unregistered establishments in Cambodia. For identification, I exploit a natural experiment from Cambodia; the EU’s reform in rules of origin for the EU Generalized System of Preferences provided a positive export shock to the garment industry and a negative import shock to the textile industry. I find significant productivity improvements for both formal and informal establishments in the garment industry during the post-reform period. Positive export shocks promote productivity for both formal and informal firms.

Suggested Citation

  • Tanaka, Kiyoyasu, 2020. "Trade and productivity in formal and informal firms : panel data evidence from Cambodia," IDE Discussion Papers 771, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper771
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    More about this item

    Keywords

    Trade; productivity; formal; informal; Cambodia; International trade;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment

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