Reports
Discussion Papers
No.771 Trade and Productivity in Formal and Informal Firms: Panel Data Evidence from Cambodia
March 2020
ABSTRACT
The impact of trade on productivity is a crucial policy question for development, but prior work predominantly focuses on the formal sector. This paper constructs new panel data on formally registered and unregistered establishments in Cambodia. For identification, I exploit a natural experiment from Cambodia; the EU’s reform in rules of origin for the EU Generalized System of Preferences provided a positive export shock to the garment industry and a negative import shock to the textile industry. I find significant productivity improvements for both formal and informal establishments in the garment industry during the post-reform period. Positive export shocks promote productivity for both formal and informal firms.
Keywords: Trade, productivity, formal, informal, Cambodia
JEL classification: F13, F14, D24, E26, L67
PDF available at http://hdl.handle.net/2344/00051601
Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.