Investment responses to trade liberalization: impact of CKFTA

Abstract

Using data from Canadian and Korean public companies available at Bloomberg, this study attempts to demonstrate the relationship between investment in establishments and trade liberalization, an effect caused mainly by increased competitiveness. This project contributes to the studies previously conducted on the subject and adds information regarding countries with different peculiarities, such as Canada, better known for being the main trading partner of the USA and major producer of commodities, and South Korea, which for some decades has invested to become a reference in technology and world innovation. In line with previous studies, a negative and statistically significant relationship was found between investment and trade liberalization, an effect that was verified mainly for those establishments that are far from the frontier of the sector in which they operate, and for the firms in the frontier this effect is positive.

Keywords:

• Trade liberalization
• investment responses
• free trade agreement
• CKFTA
• international business
• investment

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Adriana Bruscato Bortoluzzo

Adriana Bruscato Bortoluzzo, PhD in Statistics from USP, with a master's degree and a bachelor's degree in Statistics from the same University. She started at Insper in 1999 as a part-time teacher until 2009, when she became an assistant professor and, since 2016, she is an associate professor, also dedicated to research. She is also the coordinator of Insper's Scientific Initiation Program (PIBIC) and Monograph (graduation in Economics). She has articles published in national academic journals, such as Brazilian Administration Review (BAR), Economic Studies, Brazilian Finance Review and USP's Administration Magazine (RAUSP); and international, such as Emerging Markets Finance & Trade and Journal of Applied Statistics. Currently, he is dedicated to research in analysis of mergers and acquisitions in Brazil and cross border, in estimating the cost of capital and optimizing the capital structure of companies in Brazil, in addition to dedicating himself to various topics in Applied Statistics.

Camila de Freitas Souza Campos

Camila de Freitas Souza Campos, PhD, Undergraduate and master's degree in Economic Sciences from USP and PhD in Economics from Yale University. She was Assistant Professor at Aarhus School of Business, Denmark. She is currently an Assistant Professor at Insper. As a researcher, her area of expertise is International Trade, with a focus on empirical analysis. In addition to academic experience, she has worked in the research department of the Inter-American Development Bank, in Washington (2005), and as a consultant for IPEA, in Brasília (2006). She is a professor of international trade disciplines at undergraduate and master's degrees.

Helder Albuquerque Vaz

Mr. Helder Albuquerque Vaz, Insper, Master in Economics – Insper.