Firms' Preferences over Multidimensional Trade Policies: Global Production Chains, Investment Protection and Dispute Settlement Mechanisms *

TitleFirms' Preferences over Multidimensional Trade Policies: Global Production Chains, Investment Protection and Dispute Settlement Mechanisms *
Publication TypeJournal Article
Year of Publication2016
AuthorsKim ISong, Milner H, Bernauer T, Spilker G, Osgood I, Tingley D
JournalWorking Paper
AbstractIn addition to the conventional focus on market access, recent trade agreements have included provisions related to other aspects of trade, such as investment protection, dispute settlement mecha-nisms, and escape clauses that enhance flexibility. We argue that preferences over these increasingly salient dimensions of trade policy will vary by firm, not by industry, and that a firm's preferences will depend on its position within global production networks. To estimate preferences over multiple policy dimensions, we use a conjoint experiment on firms in Costa Rica, a middle-income democracy in the developing world. We find that investment protection is the most salient trade policy dimension for firms who are most deeply integrated into global production networks. In addition, strong dispute settlement procedures are most valued by exporters who are not central to global supply networks. Furthermore, we find far fewer differences across industries than among firms, thus challenging the conventional focus on inter-industry distinctions in the trade policy literature.
URLhttp://wp.peio.me/wp-content/uploads/2016/12/PEIO10_paper_19.pdf http://web.mit.edu/insong/www/%5Cnhttp://www.princeton.edu/∼hmilner/