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Investment Facilitation, Trade Liberalization and Resource Allocation
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TitleInvestment Facilitation, Trade Liberalization and Resource Allocation  
AuthorChen Hangyu and Huang Xianhai  
Organization(ZheJiang University);。 
Key WordsMultiproduct Firm; investment facilitation; trade liberalization; resource allocation 
AbstractThis paper builds a model based on multiproduct firm to analyze the firm’s foreign investment, and investigates the mechanism how investment facilitation and trade liberalization affect the firm’s productivity and exports variety. The model shows unilateral facilitation and liberalization have a positive effect on trading partner’s welfare at the expense of home country’s welfare, whereas bilateral facilitation and liberalization would rise the welfare of both countries. Facilitation and liberalization have different effect on firm’s exports variety, facilitation make the firm increase variety while liberalization decrease. However, facilitation and liberalization both make the firm’s productivity increase and improve the efficiency of resource allocation. The data of Chinese firm from 2000 to 2006 proves our conclusion, and the productivity improvement effect of investment facilitation will be more significant than trade liberalization for high-productivity firm. 
Serial NumberWP969 
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