Firm-Level Decomposition of GVC
This paper extends the standard inter-country input-output (ICIO) table to include firm-level production linkages both across economies and within an economy where such firm-level data is observable. Using domestic firm-to-firm transactions data and customs data, we first propose procedures to construct the inter-country input-output firm-level (ICIOF) table that integrates firm-level production and trade relationships into a global input-output framework. Building on the value-added accounting framework of Koopman, Wang, and Wei (2014) and Borin and Mancini (2023), we further develop the methodology to decompose firm-level exports into value-added and double-counted contents, distinguishing a firm's own value-added from that of other domestic firms and foreign producers. We document several findings from applying the ICIOF construction procedure and the decomposition methodology to the Taiwanese economy.
The China Shock Revisited: Firm Effects of Import Competition in India
I examine the causal impact of Chinese import competition between 1998 and 2009 on Indian plants' revenue, likelihood of exit, and product mix by exploiting variation across sectors in import exposure over time. On average, Indian plants face a decline in revenue, are more likely to exit, and are less likely to switch and to upgrade products in response to rising Chinese imports. The negative effect on the likelihood of product switching is diminished for the largest firms. These results are unique to Chinese import competition as I find mixed results on Indian firms for shocks coming from select developed countries. I demonstrate in a model that a reduction in trade costs leads to a greater influx of more productive foreign firms into upgraded sectors than into less-upgraded sectors, which limits the ability of less productive domestic firms to capture market share and discourages them from upgrading their products. The key parameters influencing the model's predictions are the relative mean productivity of foreign and domestic firms.
