Introduction
Introduction
Chapter one begins by offering theory and evidence for the central role of firms in the political economy of trade. The chapter draws on recent innovations in administrative data to describe the firm level dynamics undergirding contemporary globalization, and how these dynamics support regulatory protection. Interdependence theory suggests that the connections across borders formed by firms would drive governments to cooperate. Generalizing the example of regulatory protection, this chapter lays out a theory of entangled mercantilism in which government have interests in restricting trade to shift profits toward those firms that have local affiliates, all at the expense of those outside their borders.
Keywords: firm in international trade, interdependence theory, mercantilism
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