American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Trade Liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters
American Economic Review
vol. 103,
no. 6, October 2013
(pp. 2169–95)
Abstract
If trade barriers are managed by inefficient institutions, trade liberalization can lead to greater-than-expected gains. We examine Chinese textile and clothing exports before and after the elimination of externally imposed export quotas. Both the surge in export volume and the decline in export prices following quota removal are driven by net entry. This outcome is inconsistent with a model in which quotas are allocated based on firm productivity, implying misallocation of resources. Removing this misallocation accounts for a substantial share of the overall gain in productivity associated with quota removal.Citation
Khandelwal, Amit K., Peter K. Schott, and Shang-Jin Wei. 2013. "Trade Liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters." American Economic Review, 103 (6): 2169–95. DOI: 10.1257/aer.103.6.2169Additional Materials
JEL Classification
- F13 Trade Policy; International Trade Organizations
- F14 Empirical Studies of Trade
- L67 Other Consumer Nondurables
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- O19 International Linkages to Development; Role of International Organizations
- P23 Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population
- P33 Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid