Economic Research Institute for ASEAN and East Asia
The Effects of the Temporary Protection on Firm Performances: Evidence from the Steel Industry in Viet Nam
Trade protection may have significant impacts on sectors other than those targeted by protection policies, especially when the target sector produces goods that are essential inputs to downstream sectors. Using panel Vietnamese enterprise surveys from 2010 to 2017, this paper examines whether temporary trade protection has a significant impact on the steel sector and downstream users of steel. We find that, during the trade protection period for the steel sector, this policy increased sales of protected firms but hurt downstream firms. In particular, trade protection has significant impacts on the sales, profit, and productivity of downstream firms in sectors that use steel intensively as their inputs. Additionally, these adverse effects of protection are more severe for small downstream firms.
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