Heterogeneous impacts of regional trade liberalisation on export entry and training: A multi‐destination perspective

Abstract This paper studies how the export participation and labour training decisions of domestic manufacturers are affected by reduced trade barriers due to a regional trade agreement. We develop a general equilibrium model with heterogeneous firm‐level productivity and two export destinations to explain firm performance following regional trade liberalisation. Then, theoretical predictions are tested by generalised difference‐in‐differences estimations. While a single‐destination framework shows that the decrease in India's tariffs leads to increased export entry and training intensity by Chinese manufacturers, the effects of regional trade integration on firms' skill upgrading are heterogeneous in our multi‐destination setting.