Firm Heterogeneity and Trade-Policy StancesEvidence from a Survey of Japanese Producers

Abstract

AbstractRecent research in international political economy has begun to explore the implications of producer heterogeneity for trade politics. Variations in productivity and size lead to systematic variations in market behaviors, especially with respect to firms’ abilities to engage foreign markets. This heterogeneity similarly leads to systematic variations in policy stances: Highly productive firms are more likely to favor trade liberalization than their less productive counterparts. I test the role of firm heterogeneity on trade-policy stances using original and representative survey data of Japanese manufacturers. I find that highly productive firms are more likely to favor liberalization than others, while a large portion of producers is indifferent to trade-policy reform. Other producers do not know how they would be impacted by liberalization; these tend to be smaller than their counterparts. The relationship between productivity and pro-trade attitudes is robust, even when controlling for a wide range of internationalization modes.