Trade and Migration: Firm-Level Evidence (LONG VERSION)

Migration has been associated with higher levels of trade. Previous studies interpret this as evidence of migrants’ ability to lower trade costs. Nevertheless, no study has investigated the impact of migrants on firms’ foreign trade. Thus, they fail to both provide evidence on the role that migrants may play in lowering firms’ trade costs, and exactly through which mechanisms the impact is derived. This study, being the first to study in depth the impact of immigration on trade at the firm level, bridges this gap in research. It utilizes new and unique employer-employee data for 12,000 Swedish firms, for the period 1998-2007, in a firm-level gravity framework. It provides novel firm-level evidence, demonstrating a significant, positive, and robust impact of immigrants in raising firms’ foreign trade. Migrants are found to increase trade both on the extensive and intensive product margin. Further, the study is able to conclude that the sustained effect mainly derives from lower information frictions through superior knowledge of foreign-markets, although contacts are also important.trade costs; information; trust; migration; heterogeneous firms; gravity; firmlevel data; product margins

Mitigating information frictions in trade:Evidence from export credit guarantees

Information frictions make foreign trade risky. In particular, the risk of buyer default deters firms from selling abroad. To address this issue, many countries offer export credit guarantees to provide insurance to exporters. In this paper, we investigate the causal effects of guarantees by exploiting a quasi-natural experiment in Sweden and rich register data on guarantees, firms and trade. Estimates from a fuzzy regression discontinuity design show large positive effects on the probability of exporting and the value of exports to the destination for which the guarantees are issued. These results are robust to an alternative approach using a difference-in-differences matching estimator. Further findings suggest that guarantees impact firms heterogeneously and play an important role in resolving buyer default risk and easing liquidity constraints. Larger impacts are observed in non-OECD countries, on smaller, liquidity constrained exporters and for firms selling products that face a relatively high cost of buyer default.</p

Globalization on hold or in reverse?

Country after country has now imposed restrictions on international travel, and foreign trade is collapsing in tandem with falling demand and disruptions in supply chains. The coronavirus has put globalization on hold. But will globalization be reversing in the longer term? Magnus Lodefalk provides perspectives from research in international economics.Jean Monnet TIISA Networ

Servicification of Manufacturing Firms Makes Divides in Trade Policymaking Antiquated

The decline of manufacturing in OECD countries and job implications has been a long-time concern. Recently, policy-makers have set out for reindustrialisation. A trend related to these concerns and aspirations is the servicification of manufacturing – the increase in use, produce and sales of services. However, servicification of firms and its role for foreign trade and policy have only received limited attention. This paper reviews micro- level evidence and discusses trade policy implications. Servicification is found in several countries, including China, and there are indications that imported, domestic and exported services are key for the competitiveness of today’s manufacturing firms and their participation in international value chains. Therefore, the historic divides in trade-policy-making between trade in manufactures and services, between offensive and defensive interests, and between modes of supply are largely antiquated. Potential trade policy implications also include to: reform how governments consult business for trade negotiations; facilitate cross-border movement of persons; and cut tariffs on services embodied and embedded in manufactures and their sales. Tjänstefiering och internationalisering av tillverkningsindustri

Servicification of Manufacturing : Evidence from Swedish Firm and Enterprise Group Level Data

The manufacturing industry in industrialised countries is often argued to servicify - use and sell more services - but knowledge is poor. We examine the phenomenon using detailed and com-prehensive micro level data at both the firm and enterprise group level for Sweden (1997-2006). We find that manufacturing is servicifying substantially. Services and qualified services are increasingly characterising in-house activity in manufacturing. The results imply that treat-ing services and manufacturing separately - for instance in trade policy negotiations - may be inappropriate in industrialised countries. Finally, the findings illustrate the value of enterprise group level data when studying structural economic changes

Servicification of Manufacturing : Evidence from Swedish Firm and Enterprise Group Level Data

The manufacturing industry in industrialised countries is often argued to servicify - use and sell more services - but knowledge is poor. We examine the phenomenon using detailed and com-prehensive micro level data at both the firm and enterprise group level for Sweden (1997-2006). We find that manufacturing is servicifying substantially. Services and qualified services are increasingly characterising in-house activity in manufacturing. The results imply that treat-ing services and manufacturing separately - for instance in trade policy negotiations - may be inappropriate in industrialised countries. Finally, the findings illustrate the value of enterprise group level data when studying structural economic changes

Servicification of Manufacturing : Evidence from Swedish Firm and Enterprise Group Level Data

The manufacturing industry in industrialised countries is often argued to servicify - use and sell more services - but knowledge is poor. We examine the phenomenon using detailed and com-prehensive micro level data at both the firm and enterprise group level for Sweden (1997-2006). We find that manufacturing is servicifying substantially. Services and qualified services are increasingly characterising in-house activity in manufacturing. The results imply that treat-ing services and manufacturing separately - for instance in trade policy negotiations - may be inappropriate in industrialised countries. Finally, the findings illustrate the value of enterprise group level data when studying structural economic changes