Exporting and environmental performance: where you export matters

Empirical analyses that rely on micro-level panel data have found that exporters are generally less pollutant than non-exporters. While alternative explanations have been proposed, firm level data has not been used to examine the role of destination markets behind the relationship between exports and pollution. In this paper we argue that because consumers in high-income countries have higher valuations for clean environments than consumers in developing countries, exporters targeting high-income countries are more likely to improve their environmental outcomes than exporters targeting destinations where valuations for the environment are not high. Using a panel of firm-level data from Chile we find support to this hypothesis. A 10 percentage point increase in the share of exports to high-income countries is associated with a reduction in CO2 pollution intensity of about 16%. The results have important implications for firms in developing countries aiming to target high-income markets.

Global Firms and Global Sheriffs? Why Territory Matters for Extraterritorial Enforcement of Regulatory Regimes

International regimes demand states regulate private companies to ensure better governance of markets. Although global firms can evade regulations creating complex ownership structures, a few countries enforce their laws extraterritorially. They prosecute firms regardless of their nationality, like “global sheriffs”. However, these countries only prosecute a fraction of the foreign firms under their jurisdiction. I study this phenomenon focusing on US extraterritorial prosecution. I argue that US authorities are more likely to prosecute foreign companies with US investment. Formally, this is no requirement for the application of American regulations. Yet, it exposes a foreign company to the local public opinion. US prosecutors exploit induced reputational cost to obtain cooperation and retrieve information to build a case. My empirics leverage novel firm-level data on law enforcement under the anti-bribery regime. US authorities are 0.26 more likely to investigate a suspect foreign company when it has investment in the US.

Collateral Booms and Information Depletion

We develop a new theory of information production during credit booms. Entrepreneurs need credit to undertake investment projects, some of which enable them to divert resources. Lenders can protect themselves from such diversion in two ways: collateralization and costly screening, which generates durable information about projects. In equilibrium, the collateralization-screening mix depends on the value of aggregate collateral. High collateral values make it possible to reallocate resources towards productive projects, but they also crowd out screening. This has important dynamic implications. During credit booms driven by high collateral values (e.g. real estate booms), economic activity expands but the economy’s stock of information on existing projects gets depleted. As a result, collateral-driven booms end in deep crises and slow recoveries: when booms end, investment is constrained both by the lack of collateral and by the lack of information on existing projects, which takes time to rebuild. We provide empirical support for the mechanism using US firm-level data.

Neo-Dualism: Accumulation, Distress, and Proliferation of a Fissured Informality

A dominant strand of orthodoxy argues that the problem of the informal sector could be mitigated through the capitalistic growth process. But our observations on India are different—with an expansion of the capitalistic formal sector, as the economy grows, there is a proliferation of fissured informality. Using a structuralist macro-model, we provide certain explanations for this phenomenon, which are also tested empirically using Indian subnational-state and firm-level data. Thus, we explore both the short- and long-run effects of the expansion of the formal sector on the heterogeneous informal economy. While a section of the population is pulled into the advanced informal activities, a vast segment is pushed to petty production. Accordingly, the orthodox transition narrative is questioned and alternative policy and political possibilities are introduced. JEL Classification: O11, O13, O17, P48