Mohamed AFIFI

Return to Protectionism? Technical Regulations and Firms’ Technology Choices: Evidence From India

Junior Researcher Seminar – December 14, 2023 – 12:15-01:15 – Room 116, MSE

In recent years, the trend toward non-tariff measures (NTMs), particularly technical barriers to trade (TBT), has raised concerns about the potential negative impacts on the benefits of trade liberalization linked to technology adoption. The objective of this paper is to investigate the effect of restrictive TBTs introduced by India on firms’ decision to adopt technology. By matching a database of TBT measures that were raised as concerns at the WTO (Specific Trade Concerns –STCs) with a panel dataset of Indian firms from 1996-2005, this study finds that an increase in restrictive TBTs on inputs reduce the likelihood of firms importing capital goods and upgrading foreign technology. However, these TBTs increase the probability of firms investing in domestic R&D. The results suggest that, in this context, firms tend to substitute foreign inputs with domestic ones to comply with regulations and avoid potential trade barriers.