Trade liberalization and embedded institutional reform

Trade liberalization and embedded institutional reform

by Amit Khandelwal

Book 17524 of NBER working paper series -- working paper

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"If trade barriers are managed by inefficient institutions, trade liberalization can lead to greater-than-expected gains. We examine Chinese textile and clothing exports before and after the elimination of externally imposed export quotas. We find that the surge in export value and decline in export prices following quota removal is driven by net entry, and show that this dominance is inconsistent with use of a productivity-based allocation of quota licenses by the Chinese government. Our counterfactual implies that elimination of misallocated quotas raised the overall productivity gain of quota removal by 28 percent"--National Bureau of Economic Research web site.

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