 Trade policy uncertainty and new firm entry: Evidence from ChinaChuantao Cui and Leona Shao-Zhi Li () Journal of Development Economics, 2023, vol. 163, issue C Abstract: This study offers novel evidence that reduced trade policy uncertainty (TPU) in the destination market promotes domestic entrepreneurial activities in a large developing economy. Exploiting China’s WTO accession as a quasi-natural experiment, we find that Chinese manufacturing industries with greater TPU reduction are associated with relative increases in the new firm entry rate. The TPU effect is more pronounced in industries with lower entry barriers or larger irreversible investments. In addition, TPU reduction fosters new entrants through both the exporting and non-exporting margins and contributes to strengthening regional agglomeration forces. Heterogeneity across regions with varying exporting costs and entry barriers is also identified, illustrating the important synchronization between external openness and internal reform for developing economies. Last, we show that reduction in TPU intensifies industry-level competition, induces better-quality entrants, and that new firm entry plays a non-negligible role in linking TPU reduction to improved economic performance. Keywords: Trade policy uncertainty; International trade; Firm entry; Entrepreneurship; WTO accession (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:163:y:2023:i:c:s0304387823000482 DOI: 10.1016/j.jdeveco.2023.103093 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
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