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James Tybout

Other affiliations: World Bank, Georgetown University, University of Washington  ...read more
Bio: James Tybout is an academic researcher from Pennsylvania State University. The author has contributed to research in topics: Productivity & Panel data. The author has an hindex of 39, co-authored 93 publications receiving 14502 citations. Previous affiliations of James Tybout include World Bank & Georgetown University.


Papers
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Journal ArticleDOI
TL;DR: In this paper, the causal links between exporting and productivity using plant-level data were analyzed. And the authors concluded that relatively efficient erms become exporters; however, in most industries, erms' costs are not affected by previous exporting activities.
Abstract: Do erms become more efficient after becoming exporters? Do exporters generate positive externalities for domestically oriented producers? In this paper we tackle these questions by analyzing the causal links between exporting and productivity using plant-level data. We look for evidence that erms’cost processes change after theybreak into foreign markets. We end that relatively efficient erms become exporters; however, in most industries, erms’ costs are not affected by previous exporting activities. So the well-documented positiveassociation between exporting and efficiency is explained by the self-selection of the moreefficient erms intothe exportmarket. Wealsoend some evidence of positive regional externalities.

2,115 citations

Posted Content
TL;DR: In this paper, the authors quantified the effect of prior exporting experience on the decisions of Colombian manufacturing plants to participate in foreign markets and developed a dynamic discrete-choice model of exporting behavior that separates the roles of profit heterogeneity and sunk entry costs in explaining plants' exporting status.
Abstract: Recent theoretical models of entry predict that, in the presence of sunk costs, current market participation is affected by prior experience This paper quantifies the effect of prior exporting experience on the decisions of Colombian manufacturing plants to participate in foreign markets It develops a dynamic discrete-choice model of exporting behavior that separates the roles of profit heterogeneity and sunk entry costs in explaining plants' exporting status Sunk costs are found to be significant and prior export experience is shown to increase the probability of exporting by as much as sixty percentage points Copyright 1997 by American Economic Association

1,990 citations

Posted Content
TL;DR: The authors analyzed the causal links between exporting and productivity using firm-level panel data from three semi-industrialized countries and found that relatively efficient firms become exporters, but firms' unit costs are not affected by previous export market participation, while the well-known efficiency gap between exporters and non-exporters is due to self-selection of the more efficient firms into the export market, rather than learning by exporting.
Abstract: Is there any empirical evidence that firms become more efficient after becoming exporters? Do firms that become exporters generate positive spillovers for domestically-oriented producers? In this paper we analyze the causal links between exporting and productivity using firm-level panel data from three semi-industrialized countries Representing export market" participation and production costs as jointly dependent autoregressive processes, we look for evidence that firms' stochastic cost processes shift when they break into foreign markets We find that relatively efficient firms become exporters, but firms' unit costs are not affected by previous export market participation So the well-known efficiency gap between exporters and non-exporters is due to self-selection of the more efficient firms into the export market, rather than learning by exporting Further, we find some evidence that exporters reduce the costs of breaking into foreign markets for domestically oriented producers, but they do not appear to help these producers become more efficient

1,986 citations

Posted Content
TL;DR: Tybout et al. as mentioned in this paper found that protection increases firms' price-cost margins and reduces average efficiency levels at the margin, which suggests that the general trend toward trade liberalization has yielded greater benefits than the traditional gains from specialization.
Abstract: Competition among manufacturers in developing countries is remarkably vigorous. Nonetheless, markets are imperfect, so the general trend toward trade liberalization has yielded benefits beyond the traditional gains from specialization. Manufacturing firms in developing countries have traditionally been relatively protected. They have also been subject to heavy regulation, much of it biased in favor of large enterprises. Accordingly, it is often argued that manufacturers in these countries perform poorly in several respects: - Markets tolerate inefficient firms, so cross-firm productivity dispersion is high. - Small groups of entrenched oligopolists exploit monopoly power in product markets. - Many small firms are unable or unwilling to grow, so important economies of scale go unexploited. Tybout assesses each of these conjectures, drawing on plant - and firm - level studies of manufacturers in developing countries. He finds systematic support for none of them. Turnover is substantial, exploited scale economies are modest, and convincing demonstrations of monopoly rents are generally lacking. Overprotection and overregulation are probably less a problem in developing countries than are uncertainty about policies and demand, poor rule of law, and corruption. Tybout does find some evidence that protection increases firms' price-cost margins and reduces average efficiency levels at the margin. And although the econometric evidence on technology diffusion in developing countries is limited, it does suggest that protecting learning industries is unlikely to foster productivity growth. All of which suggests that the general trend toward trade liberalization has yielded greater benefits than the traditional gains from trade. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to link firm-level performance with commerical policy.

1,322 citations

Journal ArticleDOI
TL;DR: The authors assess these conjectures and find none to be systematically supported, and conclude that small firms are unable or unwilling to grow, so important scale economies go unexploited in developing countries.
Abstract: The manufacturing sectors of developing countries have traditionally been relatively protected. They have also been subject to heavy regulation, much of which has favored large firms. Accordingly, it is often argued that in these countries: (1) markets tolerate inefficient firms, so cross-firm productivity dispersion is high; (2) small groups of entrenched oligopolists exploit monopoly power in product markets; and (3) many small firms are unable or unwilling to grow, so important scale economies go unexploited. Drawing on plant and firm level studies, I assess each of these conjectures and find none to be systematically supported. However, many open issues remain.

1,207 citations


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Book
01 Jan 2001
TL;DR: This is the essential companion to Jeffrey Wooldridge's widely-used graduate text Econometric Analysis of Cross Section and Panel Data (MIT Press, 2001).
Abstract: The second edition of this acclaimed graduate text provides a unified treatment of two methods used in contemporary econometric research, cross section and data panel methods. By focusing on assumptions that can be given behavioral content, the book maintains an appropriate level of rigor while emphasizing intuitive thinking. The analysis covers both linear and nonlinear models, including models with dynamics and/or individual heterogeneity. In addition to general estimation frameworks (particular methods of moments and maximum likelihood), specific linear and nonlinear methods are covered in detail, including probit and logit models and their multivariate, Tobit models, models for count data, censored and missing data schemes, causal (or treatment) effects, and duration analysis. Econometric Analysis of Cross Section and Panel Data was the first graduate econometrics text to focus on microeconomic data structures, allowing assumptions to be separated into population and sampling assumptions. This second edition has been substantially updated and revised. Improvements include a broader class of models for missing data problems; more detailed treatment of cluster problems, an important topic for empirical researchers; expanded discussion of "generalized instrumental variables" (GIV) estimation; new coverage (based on the author's own recent research) of inverse probability weighting; a more complete framework for estimating treatment effects with panel data, and a firmly established link between econometric approaches to nonlinear panel data and the "generalized estimating equation" literature popular in statistics and other fields. New attention is given to explaining when particular econometric methods can be applied; the goal is not only to tell readers what does work, but why certain "obvious" procedures do not. The numerous included exercises, both theoretical and computer-based, allow the reader to extend methods covered in the text and discover new insights.

28,298 citations

Journal ArticleDOI
TL;DR: This paper developed a dynamic industry model with heterogeneous firms to analyze the intra-industry effects of international trade and showed how the exposure to trade will induce only the more productive firms to enter the export market (while some less productive firms continue to produce only for the domestic market).
Abstract: This paper develops a dynamic industry model with heterogeneous firms to analyze the intra-industry effects of international trade. The model shows how the exposure to trade will induce only the more productive firms to enter the export market (while some less productive firms continue to produce only for the domestic market) and will simultaneously force the least productive firms to exit. It then shows how further increases in the industry's exposure to trade lead to additional inter-firm reallocations towards more productive firms. The paper also shows how the aggregate industry productivity growth generated by the reallocations contributes to a welfare gain, thus highlighting a benefit from trade that has not been examined theoretically before. The paper adapts Hopenhayn's (1992a) dynamic industry model to monopolistic competition in a general equilibrium setting. In so doing, the paper provides an extension of Krugman's (1980) trade model that incorporates firm level productivity differences. Firms with different productivity levels coexist in an industry because each firm faces initial uncertainty concerning its productivity before making an irreversible investment to enter the industry. Entry into the export market is also costly, but the firm's decision to export occurs after it gains knowledge of its productivity.

9,036 citations

Posted Content
TL;DR: This article showed that the gravity model usually estimated does not correspond to the theory behind it and showed that national borders reduce trade between the US and Canada by about 44% while reducing trade among other industrialized countries by about 30%.
Abstract: The gravity model has been widely used to infer substantial trade flow effects of institutions such as customs unions and exchange rate mechanisms. McCallum [1995] found that the US-Canada border led to trade between provinces that is a factor 22 (2,200%) times trade between states and provinces, a spectacular puzzle in light of the low formal barriers on this border. We show that the gravity model usually estimated does not correspond to the theory behind it. We solve the 'border puzzle' by applying the theory seriously. We find that national borders reduce trade between the US and Canada by about 44%, while reducing trade among other industrialized countries by about 30%. McCallum's spectacular headline number is the result of a combination of omitted variables bias and the small size of the Canadian economy. Within-Canada trade rises by a factor 6 due to the border. In contrast, within-US trade rises 25%.

6,043 citations

BookDOI
TL;DR: The authors argued that the preponderance of theoretical reasoning and empirical evidence suggests a positive first-order relationship between financial development and economic growth, and that financial development level is a good predictor of future rates of economic growth.
Abstract: The author argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth. There is evidence that the financial development level is a good predictor of future rates of economic growth, capital accumulation, and technological change. Moreover, cross-country, case-style, industry level and firm-level analysis document extensive periods when financial development crucially affects the speed and pattern of economic development. The author explains what the financial system does and how it affects, and is affected by, economic growth. Theory suggests that financial instruments, markets and institutions arise to mitigate the effects of information and transaction costs. A growing literature shows that differences in how well financial systems reduce information and transaction costs influence savings rates, investment decisions, technological innovation, and long-run growth rates. A less developed theoretical literature shows how changes in economic activity can influence financial systems. The author advocates a functional approach to understanding the role of financial systems in economic growth. This approach focuses on the ties between growth and the quality of the functions provided by the financial systems. The author discourages a narrow focus on one financial instrument, or a particular institution. Instead, the author addresses the more comprehensive question: What is the relationship between financial structure and the functioning of the financial system?

5,967 citations