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Firm Adjustment to Trade Policy Changes in East Asia

Author

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  • Narjoko, Dionisius

    (Asian Development Bank Institute)

  • Urata, Shujiro

    (Asian Development Bank Institute)

Abstract

Trade and investment liberalization has been one of the key features of economic policy in many developing countries since the 1990s. Research on this subject has consistently produced more evidence on the benefits of globalization; theoretical studies give more attention to what happens within an industry when trade and liberalization occur, while empirical studies confirm the positive impact of trade liberalization. We review some recent studies on the subject of firms in a globalized economy to enable us to understand more about how firms respond to globalization or changes in trade and investment liberalization. We focus on presenting or explaining the underlying mechanisms through which the effects are realized. The studies we summarized generally confirm the positive impact of trade liberalization on productivity or the spectrum of measures reflecting productivity, such as product quality, firm size, or skill intensity. The positive impact goes through various channels, including competition and industry dynamics, exporting and innovation decisions, and production or investment decisions.

Suggested Citation

  • Narjoko, Dionisius & Urata, Shujiro, 2019. "Firm Adjustment to Trade Policy Changes in East Asia," ADBI Working Papers 945, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0945
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    References listed on IDEAS

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    More about this item

    Keywords

    trade liberalization; investment liberalization; globalization; productivity;
    All these keywords.

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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