Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France

Abstract

In this paper, we document the presence of "technology-induced" trade in France between 1997 and 2007 and assess its impact on consumer welfare. We use the staggered roll-out of broadband internet to estimate its causal effect on the importing behavior of affected firms. Using an event-study design, we find that broadband expansion increases firm-level imports by around 25%. We further find that the "sub-extensive" margin (number of products and sourcing countries per firm) is the main channel of adjustment and that the effect is larger for capital goods. Finally, we develop a model where firms optimize over their import strategy and which yields a sufficient statistics formula for the quantification of the effects of broadband on consumer welfare. Interpreted within this model, our reduced-form estimates imply that broadband internet reduced the consumer price index by 1.7% and that the import-channel, i.e. the enhanced access to foreign goods that is allowed by broadband, accounts for a quarter of that effect.

Made and Created in China: Super Processors and Two-way Heterogeneity

“…Focusing on how behind-the-border procedures influence trade flows, researchers find effects comparable or even higher than the ones found for border measures such as tariffs (Freund and Rocha, 2011;Hoekman and Nicita, 2011;Portugal-Perez and Wilson, 2012;Beverelli et al, 2015;Umana-Dajud, 2019). 7 More related to our study, the literature has recently began to examine the impact of the internet on international trade, finding substantial effects on firm-level exports (Kneller and Timmis, 2016;Fernandes et al, 2019) and imports (Malgouyres et al, 2019). 8 We contribute to this literature by providing the first look at the effect of digitization on processing trade, alongside its downstream spillovers.…”

“…7 Freund and Rocha (2011) find that transit delays have substantially hindered Africa's exports; Hoekman and Nicita (2011) show that behind-the-border measures such as logistics performance are important determinants for developing country exports; Portugal-Perez and Wilson (2012) show that the quality of both physical infrastructure and business environment play a role in developing country exports; Beverelli et al (2015) find that the WTO's trade facilitation agreement has induced developing countries to diversity their export portfolio, both in terms of products and destination markets; and Umana-Dajud (2019) shows that visa-requirements reduce bilateral flows. 8 Kneller and Timmis (2016) find a causal effect of broadband use on business service exports of firms in the UK; Fernandes et al (2019) show that the expansion of internet in Chinese provinces caused firm-level exports to rise in 1999-2007and Malgouyres et al (2019) find that the roll-out of broadband in France has substantially increased firm-level imports and thus reduced the consumer price index in 1997-2007. Brandt et al, 2019).…”

Cross-border investments and uncertainty: Firm-level evidence

“…We plot the distribution of the placebo coefficients in Figure A Table 21 of Gourio et al (2016) 17 See Malgouyres et al (2019) for a more recent application fall within the bounds of the distribution of placebos. This exercise confirms that uncertainty has a negative effect on firm growth.…”

The Impact of ICTs and Digitalization on Productivity and Labor Share: Evidence from French firms

“…For instance, the impact of ICTs on productivity has been boosted by the invention and the use of the internet. Malgouyres et al (2019) provide evidence that the expansion of broadband internet had a positive impact on imports in France at the start of the 2000s, and suggest that this phenomenon might be a driving factor behind the beneficial effect of 1 Concerning this long productivity growth decline in developed countries, see for instance Bergeaud et al (2016 and2017). Concerning the US productivity revival from the mid-1990s related to the spread of ICTs, see for instance Jorgenson et al (2008).…”