Trade liberalization along the firm size distribution: The case of the EU-South Korea FTA

Sonali Chowdhry*, Gabriel Felbermayr

*Corresponding author for this work

Publication: Scientific journalJournal articlepeer-review

Abstract

Leading theories suggest that amongst continuing exporters, lower variable trade costs should boost exports of smaller firms by the same or greater percentage rate than larger firms. However, investigating the impact of the deep EU-South Korea FTA with French customs data, we find robust evidence to the contrary. Applying a triple-difference framework, we report that the FTA increased sales in the top quartile of continuous exporters by 71.5% points more than in the bottom quartile. More than 90% of that growth premium is driven by reductions in NTBs. These findings suggest an additional channel driving the distributional effects of FTAs.

Original languageEnglish
Pages (from-to)1751-1792
Number of pages42
JournalReview of International Economics
Volume31
Issue number5
DOIs
Publication statusPublished - Nov 2023
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2023 The Authors. Review of International Economics published by John Wiley & Sons Ltd.

Keywords

  • firm heterogeneity
  • nontariff barriers
  • trade policy

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