Global Supply Chains, Currency Undervaluation, and Firm Protectionist Demands

53 Pages Posted: 20 Jul 2013 Last revised: 26 Jan 2023

See all articles by J. Bradford Jensen

J. Bradford Jensen

Georgetown University - McDonough School of Business; Peterson Institute for International Economics

Dennis P. Quinn

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy

Stephen J. Weymouth

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy

Date Written: July 2013

Abstract

We examine firm participation in global supply chains to help explain a puzzling decline in protectionist demands in the U.S. despite increased import competition and ongoing currency undervaluation. To explain firm responses to undervaluation, we rely on advances in the international trade literature that uncover intraindustry heterogeneity in firm trade and investment activities. We propose that firm foreign direct investments in, and subsequent related party trade with, countries with undervalued exchange rates will lead to fewer antidumping filings. Examining the universe of U.S. manufacturing firms, we find that antidumping petition filers are more internationally engaged than non-filing peers, but conduct less related party trade with filed-against countries. High levels of related-party imports (arm's length imports) from countries with undervalued currencies significantly decrease (increase) the likelihood of U.S. antidumping petitions. Our study highlights the centrality of global supply chains in understanding political mobilization over international economic policy.

Suggested Citation

Jensen, J. Bradford and Quinn, Dennis P. and Weymouth, Stephen J., Global Supply Chains, Currency Undervaluation, and Firm Protectionist Demands (July 2013). NBER Working Paper No. w19239, Available at SSRN: https://ssrn.com/abstract=2296294

J. Bradford Jensen (Contact Author)

Georgetown University - McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Dennis P. Quinn

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy ( email )

Washington, DC 20057
United States

Stephen J. Weymouth

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy ( email )

Washington, DC 20057
United States

HOME PAGE: http://faculty.msb.edu/sw439/

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