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This study assesses the effect of an economy's business environment on the ability of firms to be part of a global value chain (GVC). With the use of a comprehensive firm-level dataset from the World Bank Enterprise Survey—and with a special focus on the countries of the Middle East and North Africa and East Asia and Pacific regions—the contribution of the paper is threefold: First, it provides a range of measures of the characteristics of firms that would identify a firm as likely to be integrated into a GVC. Second, it examines the association between an array of business environment variables—infrastructure; access to finance; fiscal policy; enforcement of contracts; ease of obtaining permits; extent of the informal sector; trade procedures; and firm and investor security—and the likelihood of a firm's being integrated into a GVC. Third, we examine these effects separately for small and large firms and for sectors with high and low tariffs. Our main findings show that, in general, the number of days that are required to pay taxes, the number of procedures that are necessary to register property, and the time to export and to import have a significantly negative association with the likelihood of a firm's integration into a GVC. More heterogeneity is observed at the regional level, at the firm size level, and for sectors with high versus low tariffs. [ABSTRACT FROM AUTHOR]

This study investigates the impacts of carbon pricing policies on firms' greenhouse gas (GHG) emissions. We include two carbon pricing policies: carbon tax and emission trading scheme (ETS) at national and sub-national (province) levels, measured as policy existence (binary variable) and carbon price (continuous variable). Firms' GHG emissions are measured as total emissions and emission intensity. Using unique recent firm-level data from 2010 to 2021 from three East Asia countries (Japan, the Republic of Korea (ROK), and the People's Republic of China (PRC)), we obtain the following key findings. First, the national carbon pricing policy significantly reduced firms' GHG emissions and GHG emission intensity in Japan and the ROK. The greater the carbon price, the greater the impact. Second, the subnational carbon pricing policies implemented in two provinces of Japan (Saitama and Tokyo) decreased firms' GHG emissions. Third, heavy industry sectors such as energy, utilities, and industrials experienced a substantial decrease in GHG emission intensity due to the carbon pricing policy. Finally, our main results are robust to different model specifications and various measures of firms' GHG emissions. Although literature studying the ex-post impact of carbon pricing on emissions at country and sector-level is abundant, this paper contributes to the existing literature providing empirical evidence of the impact of carbon pricing policies on firms' emissions using firm-level data, which is highly limited especially in Asia. [ABSTRACT FROM AUTHOR]

In this paper, we estimate the exchange rate exposure, indicating the effect of exchange rate movements on firm values, for a sample of 1,400 firms in seven East Asian countries. The exposure estimates based on various exchange rate variables, return horizons and a control variable are compared. A key result from our analysis is that the long term effect of exchange rate movements on firm values is greater than the short term effect. And we find very similar results from using other exchange rate variables such as the U.S. dollar exchange rate, etc. Second, we add exchange rate volatility as a control variable and find that the extent of exposure is not much changed. Third, we examine the changes in exposure to exchange rate volatility with an increase in return horizon. Consequently the ratio of firms with significant exposures increases with the return horizons. Interestingly, the increase of exposure with the return horizons is faster for exposure to volatility than for exposure to exchange rate itself. Taken as a whole, our findings suggest that the socalled "exposure puzzle" may be a matter of the methodology used to measure exposure. [ABSTRACT FROM AUTHOR]

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Institutions across East Asia are in flux as a result of market pressures and political shifts. Some changes have been adaptive while others appear to erode institutional capacity. This framework article introduces the Special Issue, developing an analytic synthesis of scholarship on institutional capacity and change. We focus on the role of markets and firms in bringing about different types of institutional change, and the reconfiguration of state roles to meet new challenges. Accounts of institutional change increasingly focus on incremental institutional change and specify different endogenous processes through which it occurs. We show that changes in the way markets are structured, or market shifts, are important sources of institutional change in East Asia. Such market shifts operate in different ways and geographical scales. They can alter actor preferences with regard to institutional form, produce a shift in the relative political influence of different actors, and prompt institutional 'drift' – change in the functionality of institutions due to changed circumstances. Both states and firms play a role in these changes. As the case studies in the collection show, states and firms in the region have both reacted to contextual shifts in markets and proactively led institutional change. [ABSTRACT FROM AUTHOR]