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Amit Khandelwal

Hahn Professor of Global Affairs and Economics, Yale University


Working Papers

  • Trade and Development in a Fracturing World   ❲abstract❳
    In a fracturing world, how can low- and middle-income countries (LMICs) continue to leverage trade for economic development? Drawing on recent research at this intersection, this review argues that countries should look inward toward domestic reforms in key factor markets. I review evidence on how trade in LMICs is shaped by frictions in labor, capital, material, land, and information markets, and highlight areas where the evidence base remains thin. I also discuss research showing that trade itself can alter these underlying distortions. I concluded with a discussion of vertical policies relevant for LMICs—particularly the role of services—and suggest areas where further research is needed to assess whether development can be service-led.



  • The Value of De Minimis Imports, r/r Quarterly Journal of Economics   ❲abstract, summary❳
    A U.S. consumer can import $800 worth of goods per day free of tariffs and administrative fees. Fueled by rising direct-to-consumer trade, these "de minimis" shipments have exploded in recent years, yet are not recorded in Census trade data. Who benefits from this type of trade, and what are the policy implications? We analyze international shipment data, including de minimis shipments, from three global carriers and U.S. Customs and Border Protection. Lower-income zip codes are more likely to import de minimis shipments, particularly from China, which suggests that the tariff and administrative fee incidence in direct-to-consumer trade disproportionately benefits the poor. Theoretically, imposing tariffs above a threshold leads to terms-of-trade gains through bunching, even in a setting with complete pass-through of linear tariffs. Empirically, bunching pins down the demand elasticity for direct shipments. Eliminating §321 would reduce aggregate welfare by $10.9-$13.0 billion and disproportionately hurt lower-income and minority consumers.

Publications

  • Using Satellite Imagery to Detect the Impacts of New Highways: An Application to India, Journal of International Economics, forthcoming   ❲abstract❳
    This paper integrates daytime and nighttime satellite imagery into a spatial general equilibrium model to evaluate the returns to investments in new motorways. Our approach has particular value in developing-country settings in which spatially granular economic data are scarce. To demonstrate our method, we use publicly available imagery to evaluate India's road construction projects in the early 2000s. Estimating the model and evaluating welfare impacts only requires remotely-sensed data. We find that India's road investments improved aggregate welfare, particularly for the largest and smallest urban markets. Most welfare gains accrued within Indian districts—the unit of analysis in conventional approaches—which demonstrates the benefits of using of high-resolution satellite imagery.
  • 2024, Language Barriers in Multinationals and Knowledge Transfers, Review of Economics and Statistics   ❲abstract, bib, slides, vox, voxdev❳
    A distinct feature of MNCs is a three-tier organizational structure: foreign managers (FMs) supervise domestic managers (DMs) who supervise production workers. Language barriers between FMs and DMs could impede transfers of management knowledge. We develop a model in which DMs learn general management by communicating with FMs, but communication effort is non-contractible. These conditions generate sub-optimal communication within the MNC. If communication is complementary with language skills, the planner could raise welfare by subsidizing foreign language acquisition. We experimentally assess the validity of the general skills and the complementarity assumptions in Myanmar, a setting where FMs and DMs communicate in English. The first experiment examines the general skills assumption by asking prospective employers at domestic firms to rate hypothetical job candidates. They value candidates with both higher English proficiency and MNC experience, a premium driven, in part, by frequent interactions with FMs. The second experiment examines the complementarity assumption by providing English training to a random sample of DMs working at MNCs. At endline, treated DMs have higher English proficiency, communicate more frequently with their FMs, are more involved in firm management, and perform better in simulated management tasks. Organizational barriers within MNCs can thus hinder knowledge transfers and lead to an under-investment in English relative to the social optimum.
  • 2024, The US-China Trade War and Global Reallocations, American Economic Review: Insights   ❲abstract, bib, replication, tariffs-2018-2019, slides, weights, vox❳
    The US-China trade war created net export opportunities rather than simply shifting trade across destinations. Many "bystander" countries grew their exports of taxed products into the rest of the world (excluding the United States and China). Country-specific components of tariff elasticities, rather than specialization patterns, drove large cross-country variation in export growth of tariff-exposed products. The elasticities of exports to US-Chinese tariffs identify whether a country's exports complement or substitute the United States or China and its supply curve's slope. Countries that operate along downward-sloping supplies whose exports substitute (complement) the United States and China are among the larger (smaller) beneficiaries of the trade war.
  • 2023, The US-China Trade War and India’s Export Response, India Policy Forum   ❲abstract, slides❳
    Between 2018–19, the US and China engaged in a trade war that targeted roughly $450 billion in bilateral trade, abruptly changing market conditions for thousands of internationally traded products. Was India able to capitalize in this new global environment by increasing its exports? The short answer is: not really. The trade war did not statistically impact India's overall exports. So, the prediction that India could benefit from the trade war did not materialize. These results hopefully contribute to ongoing policy discussions for how India can leverage export opportunities in an era of increased trade tensions.



  • 2022, Using Neural Networks to Predict Micro-Spatial Economic Growth, American Economic Review: Insights   ❲abstract, appendix, git, replication, bib❳
    We apply deep learning to daytime satellite imagery to predict changes in income and population at high spatial resolution in US data. For grid cells with lateral dimensions of 1.2 km and 2.4 km (where the average US county has dimension of 51.9 km), our model predictions achieve R² values of 0.85 to 0.91 in levels, which far exceed the accuracy of existing models, and 0.32 to 0.46 in decadal changes, which have no counterpart in the literature and are 3–4 times larger than for commonly used nighttime lights. Our network has wide application for analyzing localized shocks.
  • 2022, The Economic Impacts of the US-China Trade War, Annual Review of Economics   ❲abstract❳
    In 2018, the United States launched a trade war with China, marking an abrupt departure from its historical leadership in integrating global markets. By late 2019, the United States had imposed tariffs on roughly $350 billion of Chinese imports, and China had retaliated on $100 billion of US exports. Economists have used a diversity of data and methods to assess the impacts of the trade war on the United States, China, and other countries. This article reviews what we have learned to date from this work.
  • 2021, Optimal Lockdown in a Commuting Network, American Economic Review: Insights   ❲abstract, appendix, slides, replication, bib, vox❳
    We study optimal dynamic lockdowns against COVID-19 within a commuting network. Our framework integrates canonical spatial epidemiology and trade models and is applied to cities with varying initial viral spread: Seoul, Daegu, and the New York City metropolitan area (NYM). Spatial lockdowns achieve substantially smaller income losses than uniform lockdowns. In the NYM and Daegu—with large initial shocks—the optimal lockdown restricts inflows to central districts before gradual relaxation, while in Seoul it imposes low temporal but large spatial variation. Actual commuting reductions were too weak in central locations in Daegu and the NYM and too strong across Seoul.
  • 2021, Detecting Urban Markets with Satellite Imagery: An Application to India, Journal of Urban Economics   ❲abstract, appendix, data, rep, slides, bib, vox❳
    We propose a methodology for defining urban markets based on builtup landcover classified from daytime satellite imagery. Compared to markets defined using minimum thresholds for nighttime light intensity, daytime imagery identify an order of magnitude more markets, capture more of India's urban population, are more realistically jagged in shape, and reveal more variation in the spatial distribution of economic activity. We conclude that daytime satellite data are a promising source for the study of urban forms.
  • 2020, The Return to Protectionism, Quarterly Journal of Economics [Editor’s Choice]   ❲abstract, +2019 waves, appendix, slides, tariffs-2018, replication, bib, vox❳
    After decades of supporting free trade, in 2018 the United States raised import tariffs and major trade partners retaliated. We analyze the short-run impact of this return to protectionism on the U.S. economy. Import and retaliatory tariffs caused large declines in imports and exports. Prices of imports targeted by tariffs did not fall, implying complete pass-through of tariffs to duty-inclusive prices. The resulting losses to U.S. consumers and firms that buy imports was $51 billion, or 0.27% of GDP. We embed the estimated trade elasticities in a general-equilibrium model of the U.S. economy. After accounting for tariff revenue and gains to domestic producers, the aggregate real income loss was $7.2 billion, or 0.04% of GDP. Import tariffs favored sectors concentrated in politically competitive counties, and the model implies that tradeable-sector workers in heavily Republican counties were the most negatively affected due to the retaliatory tariffs.
  • 2020, How Distortions Alter the Impacts of International Trade in Developing Countries, Annual Review of Economics   ❲abstract, slides, bib, conf, voxdev podcast❳
    Substantial research in development economics has highlighted the presence of weak institutions, market failures, and distortions in developing countries. Yet much of the knowledge generated in international trade comes from workhorse models that abstract from these frictions. This review summarizes the recent literature that assesses how these characteristics interact (or may interact) with trade reforms, resulting in different impacts in developing countries relative to what we would expect in developed countries. We discuss understudied areas that warrant further research.
  • 2019, Measuring Productivity: Lessons from Tailored Surveys and Productivity Benchmarking, American Economic Review Papers & Proceedings   ❲abstract, appendix, replication, slides, bib❳
    Economists have long recognized that the reason some countries are richer than others is not primarily due to differences in their endowments or resources, but because of how effectively their firms deploy those resources to generate economic activity. This prompts a set of obvious questions. How large are productivity differences across firms? What drives this dispersion? What policies are most effective at raising productivity? Answering these questions is an active area of research and central to this goal is the ability to accurately measure the productivity of firms. What the researcher typically wants is a measure of physical output conditional on physical inputs, termed quantity-based productivity (TFPQ). This requires data on input and output quantities that are not typically available.
  • 2018, Using Landsat and Nighttime Lights for Supervised Pixel-Based Image Classification of Urban Land Cover, Remote Sensing of Environment   ❲abstract, bib❳
    Reliable representations of global urban extent remain limited, hindering scientific progress across a range of disciplines that study functionality of sustainable cities. We present an efficient and low-cost machine-learning approach for pixel-based image classification of built-up areas at a large geographic scale using Landsat data. Our methodology combines nighttime-lights data and Landsat 8 and overcomes the lack of extensive ground-reference data. We demonstrate the effectiveness of our methodology, which is implemented in Google Earth Engine, through the development of accurate 30 m resolution maps that characterize built-up land cover in three geographically diverse countries: India, Mexico, and the US. Our approach highlights the usefulness of data fusion techniques for studying the built environment and is a first step towards the creation of an accurate global-scale map of urban land cover over time.
    • R. Goldblatt, M. Stuhlmacher, B. Tellman, N. Clinton, G. Hanson, M. Georgescu, C. Wang, F. Serrano-Candela, W. Cheng, R. Balling

  • 2017, Organizational Barriers to Technology Adoption: Evidence from Soccer-ball Producers in Pakistan, Quarterly Journal of Economics   ❲appendix, bib, vox❳
  • 2017, Exporting and Firm Performance: Evidence from a Randomized Trial, Quarterly Journal of Economics [Editor’s Choice]   ❲abstract, appendix, slides, replication, bib, vox❳
    We conduct a randomized experiment that generates exogenous variation in the access to foreign markets for rug producers in Egypt. Combined with detailed survey data, we causally identify the impact of exporting on firm performance. Treatment firms report 16–26% higher profits and exhibit large improvements in quality alongside reductions in output per hour relative to control firms. These findings do not simply reflect firms being offered higher margins to manufacture high-quality products that take longer to produce. Instead, we find evidence of learning-by-exporting whereby exporting improves technical efficiency. First, treatment firms have higher productivity and quality after controlling for rug specifications. Second, when asked to produce an identical domestic rug using the same inputs and same capital equipment, treatment firms produce higher quality rugs despite no difference in production time. Third, treatment firms exhibit learning curves over time. Finally, we document knowledge transfers with quality increasing most along the specific dimensions that the knowledge pertained to.
  • 2016, Detecting the Boundaries of Urban Areas in India: A Dataset for Pixel-Based Image Classification in Google Earth Engine, Remote Sensing   ❲abstract, data, bib❳
    Urbanization often occurs in an unplanned and uneven manner, resulting in profound changes in patterns of land cover and land use. Understanding these changes is fundamental for devising environmentally responsible approaches to economic development in the rapidly urbanizing countries of the emerging world. One indicator of urbanization is built-up land cover that can be detected and quantified at scale using satellite imagery and cloud-based computational platforms. This process requires reliable and comprehensive ground-truth data for supervised classification and for validation of classification products. We present a new dataset for India, consisting of 21,030 polygons from across the country that were manually classified as "built-up" or "not built-up," which we use for supervised image classification and detection of urban areas. As a large and geographically diverse country that has been undergoing an urban transition, India represents an ideal context to develop and test approaches for the detection of features related to urbanization. We perform the analysis in Google Earth Engine (GEE) using three types of classifiers, based on imagery from Landsat 7 and Landsat 8 as inputs. The methodology produces high-quality maps of built-up areas across space and time. Although the dataset can facilitate supervised image classification in any platform, we highlight its potential use in GEE for temporal large-scale analysis of the urbanization process. Our methodology can easily be applied to other countries and regions.
  • 2016, On the Orgins and Development of the Pakistan’s Soccer-Ball Cluster, World Bank Economic Review (ABCDE Conference Papers & Proceedings)   ❲abstract, bib❳
    Sialkot, Pakistan, is the world center of hand-stitched soccer-ball manufacturing. The existence of the cluster is puzzling and seems to argue against the "home market effect", since there is little local demand for soccer balls. This paper traces the development of the cluster from its origins in the late 1800s and shows that it was rooted in an initial home market effect due to the presence of British colonists. Subsequent expansion was driven by agglomeration forces and effective industrial policy. The case study underlines the importance of longer-term historical dynamics and the role of industrial policy for understanding a country's contemporaneous pattern of specialization in the world economy.
  • 2016, Measuring the Unequal Gains from Trade, Quarterly Journal of Economics   ❲abstract, slides, bib, vox❳
    Individuals that consume different baskets of goods are differentially affected by relative price changes caused by international trade. We develop a methodology to measure the unequal gains from trade across consumers within countries. The approach requires data on aggregate expenditures and parameters estimated from a nonhomothetic gravity equation. We find that trade typically favors the poor, who concentrate spending in more traded sectors.
  • 2016, Prices, Markups and Trade Reform, Econometrica   ❲abstract, appendix, slides, bib, mi❳
    This paper examines how prices, markups, and marginal costs respond to trade liberalization. We develop a framework to estimate markups from production data with multi-product firms. This approach does not require assumptions on the market structure or demand curves faced by firms, nor assumptions on how firms allocate their inputs across products. We exploit quantity and price information to disentangle markups from quantity-based productivity, and then compute marginal costs by dividing observed prices by the estimated markups. We use India's trade liberalization episode to examine how firms adjust these performance measures. Not surprisingly, we find that trade liberalization lowers factory-gate prices and that output tariff declines have the expected pro-competitive effects. However, the price declines are small relative to the declines in marginal costs, which fall predominantly because of the input tariff liberalization. The reason for this incomplete cost pass-through to prices is that firms offset their reductions in marginal costs by raising markups. Our results demonstrate substantial heterogeneity and variability in markups across firms and time and suggest that producers benefited relative to consumers, at least immediately after the reforms.
  • 2015, Mark-up and Cost Dispersion Across Firms: Direct Evidence from Producer Surveys in Pakistan, American Economic Review Papers & Proceedings   ❲appendix, bib❳
  • 2013, Trade Liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters, American Economic Review   ❲abstract, appendix, data, slides, bib, vox❳
    If trade barriers are managed by inefficient institutions, trade liberalization can lead to greater-than-expected gains. We examine Chinese textile and clothing exports before and after the elimination of externally imposed export quotas. Both the surge in export volume and the decline in export prices following quota removal are driven by net entry. This outcome is inconsistent with a model in which quotas are allocated based on firm productivity, implying misallocation of resources. Removing this misallocation accounts for a substantial share of the overall gain in productivity associated with quota removal.
  • 2013, Import Competition and Quality Upgrading, Review of Economics & Statistics   ❲abstract, bib, vox❳
    The production of high-quality goods is often viewed as a precondition for export success and economic development. We provide the first evidence that countries' import tariffs affect the rate at which they upgrade product quality. Our analysis uses highly disaggregated data covering exports from 56 countries across 10,000 products to the United States using a novel approach to measure quality. As predicted by distance-to-the-frontier models, we find that lower tariffs are associated with quality upgrading for products close to the world quality frontier, whereas lower tariffs discourage quality upgrading for products distant from the frontier.
  • 2011, Trade Liberalization and Firm Productivity: The Case of India, Review of Economics & Statistics   ❲abstract, appendix, bib❳
    This paper exploits India's rapid, comprehensive, and externally imposed trade reform to establish a causal link between changes in tariffs and firm productivity. Pro-competitive forces, resulting from lower tariffs on final goods, as well as access to better inputs, due to lower input tariffs, both appear to have increased firm-level productivity, with input tariffs having a larger impact. The effect was strongest in import-competing industries and industries not subject to excessive domestic regulation. While we find no evidence of a differential impact according to state-level characteristics, we observe complementarities between trade liberalization and additional industrial policy reforms.
  • 2011, The Role of Intermediaries in Facilitating Trade, Journal of International Economics   ❲abstract, appendix, data, bib❳
    This paper documents that intermediaries play an important role in facilitating international trade. We modify a heterogeneous firm model to allow for an intermediary sector. The model predicts that firms will endogenously select their mode of export – either directly or indirectly through an intermediary – based on productivity. The model also predicts that intermediaries will be relatively more important in markets that are more difficult to penetrate. We provide empirical confirmation for these predictions using the firm-level census of China's trade, and generate new facts regarding the activity of intermediaries. We also provide evidence that firms begin to export directly after exporting through intermediaries.
  • 2010, Imported Intermediate Inputs and Domestic Product Growth: Evidence from India, Quarterly Journal of Economics   ❲abstract, bib, vox❳
    New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from India to investigate the relationship between declines in trade costs, imports of intermediate inputs, and domestic firm product scope. We estimate substantial gains from trade through access to new imported inputs. Moreover, we find that lower input tariffs account on average for 31% of the new products introduced by domestic firms. This effect is driven to a large extent by increased firm access to new input varieties that were unavailable prior to the trade liberalization.
  • 2010, The Long and Short (of) Quality Ladders, Review of Economic Studies   ❲abstract, data, bib❳
    Prices are typically used as proxies for countries' export quality. I relax this strong assumption by exploiting both price and quantity information to estimate the quality of products exported to the United States. Higher quality is assigned to products with higher market shares conditional on price. The estimated qualities reveal substantial heterogeneity in product markets' scope for quality differentiation, or their "quality ladders". I use this variation to explain the heterogeneous impact of low-wage competition on US manufacturing employment and output. Markets characterized by relatively short quality ladders are associated with larger employment and output declines resulting from low-wage competition.



  • 2010, Multi-product Firms and Product Turnover in the Developing World: Evidence from India, Review of Economics & Statistics   ❲abstract, appendix, bib❳
    This paper provides evidence on the patterns of multiproduct firm production in a large developing country, India, during a period that spans market reforms. In the cross-section, multiproduct firms in India look remarkably similar to their U.S. counterparts. The time-series patterns, however, exhibit important differences. In contrast to evidence from the United States, product churning, particularly product rationalization, is far less common in India. We find no link between product rationalization and output tariff declines following India's 1991 trade liberalization. The lack of "creative destruction" is consistent with the role of industrial regulation in preventing an efficient allocation of resources.
  • 2009, Trade Liberalization and New Imported Inputs, American Economic Review Papers & Proceedings   ❲abstract, bib❳
    New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from India to investigate the relationship between declines in trade costs, imports of intermediate inputs, and domestic firm product scope. We estimate substantial gains from trade through access to new imported inputs. Moreover, we find that lower input tariffs account on average for 31% of the new products introduced by domestic firms. This effect is driven to a large extent by increased firm access to new input varieties that were unavailable prior to the trade liberalization.

Chapters & Policy Notes

Cases