PEPP Seminar: Are Politically Connected Firms More Likely to Export? (Jan 24)
2019/03/07
Title: Are Politically Connected Firms More Likely to Export?
Presenter: Dr. Yuri Kim Post-doc Researcher, Sophia Institute for Human Security, Sophia University
Date: Thursday, January 24, 2019
Time: 13:00 – 15:00
Venue: 3K Building, Room 311 (Central Area)
Coordinator: Prof. Hisahiro Naito
Abstract: Lack of information is one of the most significant barriers to export and thus access to information plays an important role in facilitating export and developing business. Another common barrier to trade is credit constraints. Both information and financial resources are heavily controlled by the government in developing countries where there are only limited open data available and financial market is immature. In this setting, one common way to access information and credit is through personal connections to politicians and government officials. This paper explores the effects of having political ties on export activities using the firm-level data from traditional apparel and textile clusters in Vietnam. Our results suggest that family connections to people in any government authorities increase the chances of getting information and financial supports from the government. Although family ties to politicians and bureaucrats increase the chances of getting additional information and financial supports as well as enthusiasm for exports, political connections do not lead to the actual export. Likely explanations are that discrimination in favor of personal connections does not result in optimal selection of social programs and generates inefficiencies. On the other hand, political connection to higher levels of government increases the chances of importing.
