Periodic Reporting for period 3 - GLOBALFIRMS (Global Firms and Global Value Chains: Measurement and Mechanisms)
Periodo di rendicontazione: 2021-01-01 al 2022-06-30
The growing fragmentation of production across firms and countries has revolutionized international trade in recent decades. Firms today choose which production stages to conduct themselves and which to outsource to other parties, which to complete at home and which to offshore abroad. Known as global value chains (GVCs), this phenomenon creates new challenges and opportunities for individual firms and aggregate economies. Of primary policy interest are the implications of GVCs for growth, the transmission of shocks across firms and borders, and the design of economic policies. Yet academic research has faced two major challenges: poor measurement and poorly understood mechanisms.
This project pursues an ambitious research program that uses exceptional new data and novel GVC measures for path-breaking GVC analysis. First, I exploit unique panel data on firm production, management practices, export and import transactions for the world’s two largest export economies, China and the US; and unique panel data on firm production, export and import transactions, and the network of domestic firm-to-firm transactions for one of the most open economies, Belgium. Depending on how the research program unfolds, I may also use other firm-level panel data with unique features for two countries at different positions of the GVC spectrum (China vs. France); a developing country undergoing trade reforms (Pakistan); a large emerging economy with an unusual institutional context (Brazil); and a developed country with an interesting trade finance policy (Denmark).
Second, I develop and implement measures that comprehensively characterize three dimensions of firms’ GVC activity: value added, production line position (upstreamness), and network position (centrality). These three measures are founded in economic theory and therefore make it possible to analyze and interpret key features of firms’ GVC position to gain valuable economic insights.
Third, I empirically and theoretically examine the determinants and consequences of firms’ GVC position through six synergistic projects. Each project makes a distinct contribution by investigating new economic mechanisms, establishing new empirical facts, and combining theory and data for informative welfare calculations. Project 1 examines the joint evolution of firms’ productivity, global production line position, in-house operations and performance over the firm lifecycle. Project 2 analyzes the role of buyer-supplier production networks for the firm size distribution. Project 3 demonstrates how superior management practices improve firms’ export performance by enhancing both their ability to produce efficiency and their capacity to produce high-quality goods. Projects 4 and 5 inform firm interactions and shock propagation in production networks. Finally, Project 6 studes the design and impact of economic policy with GVCs.
The novelty of the data and the complex mechanisms driving GVCs make this research program highly ambitious. At the same time, the importance of understanding GVCs for economic policy and academic research make this agenda extraordinarily high-return.
This project pursues an ambitious research program that uses exceptional new data and novel GVC measures for path-breaking GVC analysis. First, I exploit unique panel data on firm production, management practices, export and import transactions for the world’s two largest export economies, China and the US; and unique panel data on firm production, export and import transactions, and the network of domestic firm-to-firm transactions for one of the most open economies, Belgium. Depending on how the research program unfolds, I may also use other firm-level panel data with unique features for two countries at different positions of the GVC spectrum (China vs. France); a developing country undergoing trade reforms (Pakistan); a large emerging economy with an unusual institutional context (Brazil); and a developed country with an interesting trade finance policy (Denmark).
Second, I develop and implement measures that comprehensively characterize three dimensions of firms’ GVC activity: value added, production line position (upstreamness), and network position (centrality). These three measures are founded in economic theory and therefore make it possible to analyze and interpret key features of firms’ GVC position to gain valuable economic insights.
Third, I empirically and theoretically examine the determinants and consequences of firms’ GVC position through six synergistic projects. Each project makes a distinct contribution by investigating new economic mechanisms, establishing new empirical facts, and combining theory and data for informative welfare calculations. Project 1 examines the joint evolution of firms’ productivity, global production line position, in-house operations and performance over the firm lifecycle. Project 2 analyzes the role of buyer-supplier production networks for the firm size distribution. Project 3 demonstrates how superior management practices improve firms’ export performance by enhancing both their ability to produce efficiency and their capacity to produce high-quality goods. Projects 4 and 5 inform firm interactions and shock propagation in production networks. Finally, Project 6 studes the design and impact of economic policy with GVCs.
The novelty of the data and the complex mechanisms driving GVCs make this research program highly ambitious. At the same time, the importance of understanding GVCs for economic policy and academic research make this agenda extraordinarily high-return.
The project was successfully initiated, and scientific work is progressing at a steady pace. Some major project targets have already been achieved.
First, initial administrative logistics were completed with some delay but no disruption to scientific work. The COVID-19 pandemic slowed down some research activities in spring 2020 due to interruptions to data access, scientific meetings, and co-author availability, which may require a grant extension at a later point. Second, I have assembled an excellent team of post-docs and research assistants, and cultivated effective and collegial teamwork through group research and social events. Third, I have significantly advanced multiple projects from the proposed research agenda and laid the groundwork for others. Project 3 has been completed and is forthcoming in a top general-interest journal, Project 2 has been invited for revision at another top general-interest journal, and Project 1 has been solicited for a prestigious annual conference and associated publication in a special issue of a top field journal. Projects 4-6 are in the research design stage as planned. Finally, I have been actively disseminating research findings through invited conference speeches, seminar presentations and academic consultancy at universities, international organizations and government institutions. I have also organized and hosted seminars and conferences on the project’s research topics. I have in turn incorporated scholarly feedback into my work.
First, initial administrative logistics were completed with some delay but no disruption to scientific work. The COVID-19 pandemic slowed down some research activities in spring 2020 due to interruptions to data access, scientific meetings, and co-author availability, which may require a grant extension at a later point. Second, I have assembled an excellent team of post-docs and research assistants, and cultivated effective and collegial teamwork through group research and social events. Third, I have significantly advanced multiple projects from the proposed research agenda and laid the groundwork for others. Project 3 has been completed and is forthcoming in a top general-interest journal, Project 2 has been invited for revision at another top general-interest journal, and Project 1 has been solicited for a prestigious annual conference and associated publication in a special issue of a top field journal. Projects 4-6 are in the research design stage as planned. Finally, I have been actively disseminating research findings through invited conference speeches, seminar presentations and academic consultancy at universities, international organizations and government institutions. I have also organized and hosted seminars and conferences on the project’s research topics. I have in turn incorporated scholarly feedback into my work.
The research program contributes novel methodologies to the literature in three respects: the use of novel data, the construction and analysis of novel empirical measures, and the development of novel theoretical models and solution techniques. First, the project exploits several unique datasets that are unprecedented in the literature in their scope and scale. These unique datasets make it possible to shed light on important economic questions for the first time. Second, the program develops and implements new empirical measures that are founded in economic theory and can therefore be used to characterize and analyze key aspects of firms’ GVC activity to gain valuable economic insights. The projects also design reduced-form empirical strategies that creatively draw on the new GVC measures and other data features to support sound economic interpretation. Finally, the research introduces novel theoretical frameworks for thinking about key determinants and consequences of firms’ GVC participation. In the process, some of these theoretical models also generate new solution concepts or new methods for counterfactual welfare exercises.
The research program spans 6 distinct projects, where each project combines innovative empirical and theoretical work. In the first half of the grant period, Projects 1-3 have been advanced to the ultimate academic accomplishment of journal publication or working papers under review at journals. In the second half of the grant period, Projects 1-3 are expected to all be published and Projects 4-6 are expected to reach the working paper stage.
The research program spans 6 distinct projects, where each project combines innovative empirical and theoretical work. In the first half of the grant period, Projects 1-3 have been advanced to the ultimate academic accomplishment of journal publication or working papers under review at journals. In the second half of the grant period, Projects 1-3 are expected to all be published and Projects 4-6 are expected to reach the working paper stage.