Trade Productivity Research Articles

From Shock to Adaptation: Evaluating the Mechanisms of Trade Friction on Firms’ Total Factor Productivity Through the Lens of Digital Transformation

Against the backdrop of frequent global trade conflicts and accelerated competition in the digital economy, we investigated how trade friction shocks affect firms’ total factor productivity (TFP), with a focus on the role of digital transformation. We employed a statistical analysis method based on the multi-period difference-in-differences model with anti-dumping and countervailing measures as quasi-natural experiments to analyze firm-level panel data for Chinese exporters from 2003 to 2016. The results indicate that trade frictions compel export firms to enhance their TFP, while digital transformation further promotes this growth. This main conclusion still holds after a series of tests such as parallel trend checks, placebo tests, and variations in primary variables. A mechanism analysis shows that, in response to trade friction shocks, firms aiming to boost productivity have strategically reallocated internal resources by increasing exports of alternative products and expanding into overseas markets rather than solely relying on innovation. Additionally, digital transformation mitigates the negative effects of trade friction on firm innovation and facilitates faster internal resource reallocation during such challenges. A heterogeneity analysis reveals that digital transformation proves more beneficial for firms that are multi-product, non-state-owned, engaged in general trade, and operating in highly competitive industries. This paper contributes to the understanding of trade friction and productivity at the micro level, offering valuable insights into digital transformation strategies for firms navigating these challenges.

Firm Heterogeneity and India’s Manufacturing Exports: Lessons on Protection and Trade Theory

ABSTRACT Empirical examinations of heterogeneity among Indian manufacturing firms provide helpful lessons for trade theories and policies. Using descriptive statistics of cross-section data for 2011, 2015, and 2019, the asymptotic Wilcoxon-Mann-Whitney test, and regression analysis, the study reveals that firms are heterogeneous within each 4-digit National Industrial Classification (NIC) category, exporting firms are more productive than non-exporters, and exporter premia decline with trading activities. The study concludes that recent protectionist policies reduced extensive trade margins, firm heterogeneity, and productivity in the Indian manufacturing sector.

Socio-economic Development and Carbon Productivity: A Panel Data Analysis of the World’s Largest Carbon-Emitting Countries

AbstractAs global concerns about climate change intensify, assessing the environmental efficiency of production processes through carbon productivity has become increasingly important. This study examines the impact of socio-economic development on carbon productivity in the top 18 CO2-emitting countries, which contribute approximately 82% of global CO2 emissions, over the period 1990–2019. Using a class of econometric tests to address heterogeneity and cross-sectional dependence, we employ the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) model for final estimation, ensuring robustness with Common Correlated Effects Mean Group (CCEMG) and Augmented Mean Group (AMG) estimations. The empirical findings reveal that GDP per capita, Trade, and FDI increase carbon productivity while energy consumption and urbanization curtail carbon productivity. The country-specific effects indicated that 83% of the sample countries exhibit positive relationships between socio-economic development and carbon productivity, suggesting that these nations can serve as models for effective low-carbon policies. Moreover, the results demonstrate bi-directional relationships for GDP per capita, FDI, and energy use with carbon productivity and uni-causal relationship for trade and urbanization. The study highlights the need for implementing stricter regulations to improve energy efficiency and promote the adoption of renewable energy sources such as wind, solar, hydro, and nuclear power. Additionally, countries should incentivize green technology investments through tax breaks and subsidies, enhance international trade agreements that support the exchange of clean technologies, and develop sustainable urban planning initiatives to mitigate the negative impact of urbanization on carbon productivity.

Agricultural Service Trade and Green Development: A Perspective Based on China’s Agricultural Total Factor Productivity

Agricultural service trade is closely related to the promotion of the sustainable development of China’s agriculture and is necessary for comprehensive rural revitalization. To clarify the relationship between trade in agricultural services and agricultural green total factor productivity (AGTFP) from a macroscopic perspective and then analyze the acting path and threshold effect, can provide an important reference for improving agriculture’s green level and realizing the sustainable development of agriculture. This paper uses the provincial panel data of China from 2007 to 2022 to measure agricultural green total factor productivity (AGTFP) using the SBM-GML model and explores the impact of agricultural service trade on AGTFP with the help of the fixed effect model, the mediation effect model, and the threshold model. According to this study: (1) Trade in agricultural services can significantly increase AGTFP. (2) Mechanism analysis shows that trade in agricultural services can promote AGTFP through promoting industrial agglomeration, enhancing technological innovation, and improving factor allocation. (3) Heterogeneity analysis shows that trade in agricultural services has a more obvious role in promoting AGTFP in the eastern region and the main grain marketing area. (4) The threshold effect finds that the promotion of agricultural services trade on AGTFP will gradually increase as the level of government support rises. Therefore, China should actively promote the development of agricultural service trade, implement the concept of sustainable development, improve the level of government support, and promote the improvement in agricultural total factor productivity and sustainable development.

Circularity of potassium in a grassland-based dairy farm on a clay loam soil

A proportion of potassium (K) exits grassland-based dairy farms in tradeable products. Potassium imports are typically needed to offset depletion of soil reserves. The objectives of this study were to (i) quantify K entering and exiting a grassland-based dairy farm including K lost to water, (ii) to relate the balance between K entering and existing the farm to soil K fertility status in order to (iii) design a better K fertilisation strategy for grassland under temperate climatic conditions. The quantities of K entering and exiting a grassland-based dairy farm (Solohead Research Farm; 52⁰51’N, 08⁰21’W) were determined each year between 2005 and 2022. Potassium losses to groundwater were measured during the winters of 2020/21, 2021/22 and 2022/23. Averaged over 18 years, K entering (kg ha−1 ± standard error) was 82 ± 11 and exiting was 41 ± 4. The annual average farm K balance was 41 ± 12 kg ha−1 and ranged between −36 and 136 kg ha−1. Annual K loss to groundwater (mean ± SE kg ha−1) ranged between 6.9 ± 6.13 and 59 ± 7.4. Annual average soil test K (STK; following extraction using Morgan's solution (Na acetate + acetic acid, pH 4.8)) concentrations in paddocks across the farm ranged from 85 to 253 mg L−1. The yearly change in average STK concentrations correlated with annual farm K balance in the preceding year (R2=0.59; P<0.001). Annual farm-scale K budgets were useful in quantifying K flows in products and losses. Potassium leaching to groundwater represented the majority (55 %) of K exiting the farm; exceeding export of K in milk and other products. Maintaining overall farm STK status required annual fertiliser K inputs of 22.5 kg ha−1 between 2016 and 2022. This study elucidates the challenges in managing soil K fertility on grassland based dairy farms.

Trade, productivity, and services input intensity

AbstractUsing rich administrative microdata on Ugandan firms, we investigate the response of productivity to trade participation for firms in all sectors of the economy, and the moderating role of services input intensity. We find that companies that participate in trade, especially through importing, display a productivity premium. Firms that export are more productive only for a sub-sample spanning the manufacturing sector. We do not find evidence that using service inputs more intensively enhances the relationship between trade participation and firm productivity. Rather, we find some evidence that a higher share of spending on services inputs attenuates the positive relationship between trade status and productivity. This suggests that the quality of available services may not be up to the standard required to be internationally competitive.

Factor productivity nexus economic growth in Sub-Saharan Africa: Symmetric and asymmetric panel approaches

This study examines the effect and role of total factor productivity with other major determinants on economic growth in the Sub – Saharan Africa(SSA).It employs the data obtained from the World Bank Development Indicators spanning from 1990 to 2022 using panel ARDL, GMM and their extended asymmetric non-linear (NARDL) and (NGMM) models. The NARDL and NGMM are more superior to the counterpart ARDL and GMM symmetric models in the long-run than the short-run estimation, ensuring more efficient and reliable information regarding the effects of productivity on economic growth analysis. Finally, the robust dynamic inter-temporal Granger causality tests show that asymmetrically there is bi-directional causality between the growth rate of an upward movement in total factor productivity and real GDP. There is also bi-directional causality of a downward movement in the growth rate of the terms of trade and real GDP growth rate. The empirical findings of the study are extremely important indicators for sustained economic growth in the SSA region. Hence, this research work recommends that governments should enhance total factor productivity and terms of trade through job-trainning provision and promote trading among themselves as policy tools.

Intra-Africa Agricultural Trade, Governance Quality and Agricultural Total Factor Productivity: Evidence from a Panel Vector Autoregressive Model

Intra-Africa Agricultural Trade, Governance Quality and Agricultural Total Factor Productivity: Evidence from a Panel Vector Autoregressive Model

THE ECONOMIC DEVELOPMENT EFFECTS ON FRESHWATER ABSTRACTION FROM THE EUROPEAN PERSPECTIVE

Water scarcity is a growing concern across the globe due to climate change and demands for increased economic development. This paper analyses the relationship between economic development and freshwater abstraction in order to investigate its European impact. The analysis focuses on a total of 19 European countries, including 18 EU member states and one candidate, from 2007 to 2018. Using a panel dataset, the impact of a diverse selection of indicators of economic development (per capita GDP, the Human Development Index - HDI, water productivity and volume of international trade) on freshwater abstraction, our analysis finds that all explanatory variables are significant for cross-country variations except for international trade. To maintain scope, the analysis is limited to economicdevelopment indicators themselves, excluding the effects of climate change and the availability of water resources.

Research on the Impact of Digital Service Trade Barriers on Domestic Manufacturing Productivity

This article selects the data of 210 listed companies in Shanghai and Shenzhen A-shares from 2014 to 2019, measures the digital service trade barriers and productivity growth of electronic information manufacturing enterprises, and uses a two-way fixed effect model to analyze the impact of digital service trade barriers on electronic information manufacturing enterprises. Its impact on productivity and mechanisms, and provide policy recommendations. The research results show that: (1) Digital service trade barriers for electronic information manufacturing enterprises are generally on an upward trend. (2) Digital service trade barriers for electronic information manufacturing enterprises have a significant inhibitory effect on their productivity.

The effects of trade on national productivity - A stimulant or its handmaiden: An empirical evidence from ASEAN nations

The paper investigates the mediating relationship between Trade and National Productivity, proxied by economic growth rate in ASEAN from 2012 – 2021. Using data from the ASEAN Statistical Yearbook, this research, first, reinvigorates the positive effects of trade balance on national productivity to improve the international trade literature given new settings and contemporary contexts, second, examines the translating/mediating effects of trade towards economic performance in the ASEAN by a novel approach through the adoption of generalized least squares and structural equation models. Findings show that there is a positive correlation between FDI and economic growth, a negative between trade openness and economic growth. Interestingly, there is the mediating effects of trade towards the FDI-growth relationship, justified by the tremendous uplift after the presence of trade was conducted into the regression. Albeit found compatible, the paper constrains itself since it did not treat the confounding effects of local market characteristics such as governance structures, institutional quality, intervention of fiscal policies, and the monetary circulation as one of the internal factors; to which the present author humbly suggests for future studies. Moreover, because of data unavailability, hypotheses are tested over the 10-year span, which may impede the inference because of macroeconomic-level policy lags.

Trade Policy and Productivity Growth: Why Do Sudanese Manufacturing Firms Export Less

This paper aims to study the role of trade policy on industrial development and productivity growth. We analyze the relationship between trade policy and productivity growth of manufacturing firms in Sudan. For this work, we evaluate the previous trade policy instruments that implemented between 2000 and 2022. The study finds that Sudan’s trade policy has significant positive effects on manufacturing firms’ productivity. The study reveals that manufacturing firms offer the largest scope for productivity gains through trade policies aiming at enhancing economic growth. The study also found there was a weak support for investment promotion and tariff protection. This study recommends that building a proper trade policy to support manufacturing firms and adopt new technologies and focusing on labor intensive industries are the key success to sustain productivity growth and enable manufacturing firms’ export.

Unionization, industry concentration, and economic growth

Abstract This paper examines how unionization affects economic growth through its impact on industry concentration in a two-country model of international trade and endogenous productivity growth. Knowledge spillovers link firm-level productivity in innovation with geographic patterns of industry ensuring a faster rate of output growth when industry is relatively concentrated in the country with the greater labor supply. We show that stronger bargaining power in the relatively large country increases the rate of output growth when labor unions are employment-oriented but decreases the rate of growth when unions are wage-oriented. We then calibrate the model using labor market data for the United Kingdom and France and study the effects of union bargaining power on industry location patterns, output growth, and national welfare.

Productivity and profitability of retail trade in Croatia

Na domaćem tržištu već dulje vrijeme postoji problem niske produktivnosti i profitabilnosti trgovaca na malo zbog čega posežu za podizanjem cijena i otpuštanjem radnika. Iz tog razloga postoji potreba za razvijanjem modela koji bi olakšao donošenje godišnjih poslovnih ciljeva u trgovinskim poduzećima. Cilj je rada pomoću poslovne statistike i odabrane metodologije istražiti prediktore stope profitabilnosti i produktivnosti sektora trgovine na malo (G47). Obrađuju se sumarni godišnji podatci na uzorku vodećih poduzeća (N=37, 66 % prodaje) u djelatnosti trgovine na malo iz baze podataka FINA-e. Metodom višestruke regresije s analizom kolinearnosti provjeravaju se magnitude profitabilnosti i produktivnosti. U teorijskim su modelima identificirane varijable sa značajnim pozitivnim i negativnim utjecajem na profitnu maržu i povrat na imovinu (ROA) trgovinskih poduzeća. Rezultati mogu donijeti veću sigurnost u planiranju i olakšati postavljanje godišnjih i operativnih ciljeva trgovinskom menadžmentu jer rasvjetljavaju problem ishodišta produktivnosti i profitabilnosti. Generalizirani modeli performansi reprezentativnog poduzeća nisu pouzdani za druge djelatnosti. Iz polazišta teorije maksimizacije prodaje i testiranja modela otkrili su se novi odnosi prihoda, troškova i iskorištenja imovine, a koji su važni za poslovno upravljanje. Modeliranje profitabilnosti i produktivnosti na ovakav način proširuje mogućnosti statističke analize i na druge sektore.

Quality of Transportation Infrastructure and Trade Facilities: Opportunities and Challenges in Increasing Trade and Economic Productivity

Quality of Transportation Infrastructure and Trade Facilities: Opportunities and Challenges in Increasing Trade and Economic Productivity

Strategic Preferential Procurement Policy for Localisation and Inclusive Growth for Micro Small Medium Enterprises (MSMEs) in Gauteng Province

The study aims to develop interventions to address the low productive capacity and competitiveness levels of township Micro Small Medium Enterprises (MSMEs) to enable meaningful participation in the mainstream economy. Most township firms continue to be informal and underdeveloped. Despite countless interventions by the development finance institutions, most township enterprises remain perpetual survivalists. The study is anchored upon the neoliberal theory, which emphasizes value for money and market efficiencies in procurement, as well as interventionist theories promoting the inclusion and participation of MSMEs in business, and advocating for the localization of products through various policy interventions. The researcher adopted a mixed-method approach to gather primary and secondary data. Secondary data was used for analysis and supported by the primary information or empirical evidence. The secondary data enriched the research content and complemented the primary data. Databases and reports on township suppliers from the Gauteng Provincial Treasury (Procurement Division) and Gauteng Department of Economic Development helped determine the extent of MSMEs' access to development and financial support opportunities. The study found that the high informality level of township businesses, low level of development, poor economic infrastructure, and lack of access to finance hinder MSMEs' participation in public procurement. Programs and products offered by government agencies do not adequately respond to public procurement challenges facing MSMEs, e.g. product testing and accreditation. The high barriers to entry due to complicated administrative processes and procedures continue to deter MSMEs from participating in the mainstream economy. The Development Finance Institutions (DFIs) were found to be a challenge due to a mismatch between the resource structure to drive economic development and the products offered. The study recommends that to increase the participation of MSMEs in public procurement, there needs to be a targeted growth continuum strategy that tracks interventions from the beginning to the end. Additionally, there needs to be a shift from a quantitative approach with minimal impact to a customised one with qualitative, tangible and tradable products and skills aimed at increasing participation of MSMEs. Furthermore, the political will is required to address the resource mismatch, repurpose resources, or develop specific products by the well-resourced Development Finance Institutions to suit the material conditions of township MSMEs with lesser stringent measures.

The deforestation effects of trade and agricultural productivity in Brazil

This paper quantifies the relative footprint of trade and agricultural productivity on deforestation across Brazilian municipalities between 2000 and 2017. Using remote-sensing data, we identify distinct effects of these two phenomena on land use. Greater exposure to new genetically engineered soy seeds is associated with faster deforestation through cropland expansion. We find no significant association between local exposure to Chinese demand and deforestation, but exposure to trade with China mitigates the deforestation impacts from the new soy technology. Our findings suggest that, when considered together, productivity gains altering municipalities’ comparative advantage played a more significant role in driving deforestation across Brazil than Chinese demand alone.

Investigating the relationship between digital trade, natural resources, energy transition, and green productivity: Moderating role of R&D investment

This study investigates the influence of the green energy transition, natural resources dependency, digital trade, and environmental regulations on green productivity in selected OECD countries from 1990 to 2019. Considering the directional distance function (DDF) approach, it constructed the green productivity index and applied the heterogeneous linear panel estimations such as D-OLS “dynamic ordinary least square” and FE-OLS “fixed effects ordinary least square” to investigate the long-run relationship between variables. Further, it determines the magnitude of the variable association by addressing the quantile-based influence of the independent variables on the dependent variable using “Method of Moments Quantile Regression” (MMQR). The study also investigates the moderating effect of domestic R&D intensity and human capital to support the nexus between digital trade and green productivity. The outcomes of the MMQR suggested that digital trade is negatively associated with green productivity at low to medium quantiles, while at the highest quantiles, the relationship became positive. In contrast, green energy transition, environmental regulation, domestic R&D intensity, and human capital are significantly and positively associated with green productivity at all quantiles. Manifestly, natural resource dependency impedes green productivity at lower, medium, and higher quantiles. The marginal effects of the above variables are substantially heterogeneous at different levels of productivity growth. It suggests the transformation of industries from resource-dependent to high-tech and R&D to facilitate higher productivity growth.

Preferential Trade Agreements and Productivity: Evidence from Peru

This paper analyzes the impact of reducing output tariffs (i.e., domestic tariffs on import of final goods) and input tariffs (i.e., domestic tariffs on imports of intermediate goods) on total factor productivity growth of Peruvian manufacturing firms. Peru’s annual survey of manufacturing data from 2003–2017 is used to explore the reduction of tariffs during three preferential trade agreements: United States, China, and the European Union. Lower output tari˙s could decrease productivity by reducing firm’s market share or could increase productivity by inducing tougher import competition, while cheaper imported inputs can raise productivity via learning, variety, and quality effects. The results show that a decrease in output tariffs decreases Peruvian firms’ productivity growth for non-exporters (i.e., domestic firms producing goods that are also imported) while increasing productivity growth for exporters (i.e., domestic firms producing export goods). In contrast, a reduction in input tariffs increases firm productivity for all firms.

The effect of treating public services as commodities

IMPACTThe case for competition and marketization of public services, though widely accepted in government, has been made through the application of formal economic reasoning rather than practical experience. Efficient market production relies on a process of defining services in terms which allow for competition, choice and the substitutability of tradable products. The evidence for this theoretical position is mixed at best. This article provides policy-makers, those commissioning services and practitioners with support in arguing for public services to be judged by different criteria.