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G²LM|LIC Working Paper No. 89

Foreign and Domestic Firms: Long Run Employment Effects of Export Opportunities

Labour Markets in Low-Income Countries
Structural Change, International Trade, and Labour Markets in a Low-Income Country

We investigate a low-income country’s long run employment response to new export opportunities. The U.S.–Vietnam Bilateral Trade Agreement reduced U.S. import tariffs on exports from Vietnam. Employment grew faster in the industries most exposed to the U.S. tariff reductions and this was driven by foreign affiliates of multinationals entering Vietnam. Foreign entrants continue to expand employment long after entry–even after 16 years. Most foreign entrants are exporters and from East Asia, highlighting that opportunities created by bilateral agreements are not just limited to signing parties. Vietnam’s subsequent capacity growth allows it to export to other markets over time.

G²LM|LIC Working Paper No. 89

Foreign and Domestic Firms: Long Run Employment Effects of Export Opportunities

  • Brian McCaig
  • Nina Pavcnik
  • Woan Foong Wong
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