My doctoral dissertation consists of three independent empirical papers on International Trade in East Asia. The first chapter studies how the recent trade conflict between Japan and Korea has changed the bilateral trade between the two countries. The second chapter studies the role of Multinational Enterprises’ outward foreign direct investment on the employment volatility of domestic workers. The third chapter studies how the surge of China in the global economy has changed the technology innovation of Taiwanese firms through export channels.Chapter 1 studies the impact of the Japan-Korea trade dispute during the second half of 2019. We employ synthetic control methods (SCM), a modern econometric tool developed in the policy evaluation literature, to empirically address our research topic. Our baseline SCM results imply an 8.37%-10.64% decrease in Japanese exports to Korea for the six months after the trade dispute. We find little evidence that the trade dispute changed Japanese imports from Korea. We also observe heterogeneous negative effects across products by their attributes. Within groups of products mainly used for production input, Japanese exports of differentiated products changed more than exports of homogeneous goods, which can be understood as the supply-side effect of the trade dispute to the Korean economy. From the Korean consumer boycott which is the demand-side event of the trade dispute, the negative effects are obvious for boycotted foods and vehicles but not for other boycotted items. In the recent era of rising political challenges against the free trade regime, new empirical evidence from this paper elucidates how political tensions may change the patterns of international trade.Chapter 2 examines the role of the outward foreign direct investment (FDI) behaviors of multinational enterprises (MNEs) on the firm-level employment volatility of domestic workers. We merged firm-level data and industry-level outward FDI data from Korea to study how different types of outward FDI by Korean MNEs have disproportionately affected the employment volatility of domestic workers in different tasks. Korean MNEs’ outward FDI is strongly associated with an increase in domestic workers’ employment volatility. The relationship is stronger for manufacturing firms than non-manufacturing firms. The difference-in-differences (DD) model after proper matching reveals that FDI in pursuit of market access weakly raises the employment volatility of domestic workers. The causal effect is even more apparent in the case of FDI seeking market access to Asian emerging countries. We find few causal effects of other types of FDI, such as FDI in pursuit of labor cost savings or market access to developed countries. Our study provides the first empirical evidencethat MNEs’ outward FDI activities may unequally threaten the employment stability of domestic workers through firms’ investment purposes and workers’ tasks.Chapter 3 (joint work with Dr. ByeongHwa Choi) studies the impact of China’s surge in the global economy on the intensive and extensive margins of firm-level innovative technologies. We derive novel predictions: greater market access after China’s WTO accession results in (i) a significant increase in the patent quantity and quality of highly productive firms and (ii) a substantial expansion of technologies to new fields, mostly for highly productive firms. We confirm our predictions empirically using the U.S Patent and Trademark Office patent data matched with Taiwanese firm-level data for the 1998-2014 period.
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