Elsa Leromain

Import Liberalization as Export Destruction?

How does import protection affect export performance? In trade models with scale economies, import liberalization can reduce an industry’s exports by cutting domestic production. Elsa Leromain and her co-authors find that this export destruction mechanism reduced US export growth following the normalization of trade relations with China (Permanent Normal Trade Relations – PNTR). But there was also an offsetting boost to exports from lower input costs. The researchers use their empirical results to calibrate the strength of scale economies in a quantitative trade model. Counterfactual analysis implies that while PNTR increased aggregate US exports relative to GDP, exports declined in the most exposed industries because of the export destruction effect. On aggregate, the US and China both gain from PNTR, but the gains are larger for China.

Ms. Leromain is an applied economist with interests in international trade and economic geography. Her research studies how trade policy shapes economic activity in developed countries and how it may also shape political outcomes. During her stay at CESifo, she will work in collaboration with Dorothee Hillrichs on their joint project: “The core periphery divide and the far-right: evidence from France.” In recent years, far-right political parties have gained significant support throughout Europe. This is especially true in France where we not only observe a particularly strong growth in far-right votes in the last decades, but also a striking divergence between core and periphery municipalities. This study aims at deepening our understanding of the economic roots of this phenomenon. More specifically, the researchers study whether the spatial distribution of firms plays a role in explaining the core-periphery voting divergence leveraging rich micro-level data.

Elsa Leromain is an Assistant Professor of the Department of Economics at the University of Antwerp and an Associate Researcher at the Centre for Economic Performance (LSE) and at IRES (UCLouvain). She obtained her PhD from Paris School of Economics.