China has defied the declining trend in domestic content in exports in many countries. This paper studies China's rising domestic content in exports using firm- and customs transaction-level data. The approach embraces firm heterogeneity and hence reduces aggregation bias. The study finds that the substitution of domestic for imported materials by individual processing exporters caused China's domestic content in exports to increase from 65 to 70 percent in the period 2000–2007. Such substitution was induced by the country's trade and investment liberalization, which deepened its engagement in global value chains and led to a greater variety of domestic materials becoming available at lower prices.

This paper looks at the predictions of a standard heterogeneous firm model regarding the exports of firms across markets in response to a particular trade policy experiment and compares these predictions to the data. A unique feature of our data is that it has information on the exports of the same firm to different markets which allows us to look for a new set of predictions of such models. We argue that while certain predictions seem consistent with the data, others are not. We then describe the patterns found in the data and argue that firm and market specific demand shocks help explain a number of these anomalies. These parsimoniously capture factors, like business contacts or networks, or even fashion shocks, that make buyers more attracted to one firm rather than another in a particular market.

Bank for providing research funding and support. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors, and do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Non-Technical Summary Product variety plays an important role in the theoretical work on monopolistic competition and trade, and recent empirical work has begun to quantify this for aggregate and disaggregate import demands. The objective of this paper is to discuss the measurement of product variety in trade, using a broad cross-section of advanced and developing countries and disaggregating across sectors. We calculate the export variety of countries in their sales to the United States, and relate the export variety indexes to country productivities. We confirm that countries with greater product variety in exports also have higher productivity. This may be due to their own development of, and access to, these products. 2 1.

This paper quantifies trade policy changes and the associated trade impacts for about 100 countries between 2008 and 2009. Results show that there has been no widespread increase in protectionism. Only a few countries, including Russia, Argentina, Turkey, and China, have increased tariffs on major imported products. The United States and the EU, by contrast, rely mainly on antidumping duties to shield domestic industries. Overall, while the rise in tariffs and antidumping duties may have jointly caused global trade to drop by US$43 billion, it explains less than 2% of the collapse in world trade during the crisis period.

This paper provides a systematic estimation of import demand elasticities for a broad group of countries at a very disaggregated level of product detail. We use a semiflexible translog GDP function approach to formally derive import demands and their elasticities, which are estimated with data on prices and endowments. Within a theoretically consistent framework, we use the estimated elasticities to construct Feenstra's (1995) simplification of Anderson and Neary's trade restrictiveness index (TRI). The difference between TRIs and import-weighted tariffs is shown to depend on the tariff variance and the covariance between tariffs and import demand elasticities.