International trade deals meant to help poor countries often backfire and cause their local businesses to lose everything to big foreign companies.
While trade agreements provide better access to foreign markets, they also invite intense global competition that can overwhelm local businesses. Micro-level data from Pakistan shows that instead of thriving, established exporters saw their sales intensity drop as they struggled to adapt to the new market dynamics created by these agreements.
Export Margins and Economic Integration Agreements: Micro-level Evidence from Pakistan
SSRN · 6285278
This study investigates the impact of Economic Integration Agreements (EIAs) on export sales, as well as the extensive and intensive margins of Pakistani firms. Using a fixed-effects model and annual export receipt data from 2009 to 2021, we find that EIAs improve firms' access to new products and markets, but that the effects vary across export value and the intensive margin. In particular, EIAs are associated with lower export values and intensive margins, plausibly reflecting firm productivit