Exceptional exporter performance : cause, effect, or both?
TL;DR: A growing body of empirical work has documented the superior performance characteristics of exporting plants and firms relative to non-exporters as discussed by the authors, showing that good firms become exporters, both growth rates and levels of success measures are higher ex-ante for exporters.
About: This article is published in Journal of International Economics.The article was published on 1999-02-01 and is currently open access. It has received 2416 citations till now. The article focuses on the topics: Productivity & Capital intensity.
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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
TL;DR: This article developed a Ricardian trade model that incorporates realistic geographic features into general equilibrium and delivered simple structural equations for bilateral trade with parameters relating to absolute advantage, comparative advantage, and geographic barriers.
Abstract: We develop a Ricardian trade model that incorporates realistic geographic features into general equilibrium It delivers simple structural equations for bilateral trade with parameters relating to absolute advantage, to comparative advantage (promoting trade), and to geographic barriers (resisting it) We estimate the parameters with data on bilateral trade in manufactures, prices, and geography from 19 OECD countries in 1990 We use the model to explore various issues such as the gains from trade, the role of trade in spreading the benefits of new technology, and the effects of tariff reduction
3,782 citations
TL;DR: In this paper, the authors develop a monopolistically competitive model of trade with firm heterogeneity and endogenous differences in the "toughness" of competition across markets, in terms of the number and average productivity of competing firms.
Abstract: We develop a monopolistically competitive model of trade with firm heterogeneity—in terms of productivity differences—and endogenous differences in the “toughness” of competition across markets—in terms of the number and average productivity of competing firms. We analyse how these features vary across markets of different size that are not perfectly integrated through trade; we then study the effects of different trade liberalization policies. In our model, market size and trade affect the toughness of competition, which then feeds back into the selection of heterogeneous producers and exporters in that market. Aggregate productivity and average mark-ups thus respond to both the size of a market and the extent of its integration through trade (larger, more integrated markets exhibit higher productivity and lower mark-ups). Our model remains highly tractable, even when extended to a general framework with multiple asymmetric countries integrated to different extents through asymmetric trade costs. We believe this provides a useful modelling framework that is particularly well suited to the analysis of trade and regional integration policy scenarios in an environment with heterogeneous firms and endogenous mark-ups.
2,002 citations
TL;DR: The authors make use of transaction-level U.S. trade data to introduce a number of new stylized facts about firms and trade, such as the extensive margins of trade, that is, the number of products firms trade and the countries with which they trade, to understand the role of distance in dampening aggregate trade flows.
Abstract: Despite the fact that importing and exporting are extremely rare firm activities, economists generally devote little attention to the role of firms when discussing international trade. This paper summarizes key differences between trading and non-trading firms, demonstrates how these differences present a challenge to standard trade models and shows how recent "heterogeneous-firm" models of international trade address these challenges. We then make use of transaction-level U.S. trade data to introduce a number of new stylized facts about firms and trade. These facts reveal that the extensive margins of trade -- that is, the number of products firms trade as well as the number of countries with which they trade -- are central to understanding the well-known role of distance in dampening aggregate trade flows.
1,739 citations
TL;DR: In this paper, the authors survey what is known about the extent of international technology diffusion and channels through which technology spreads and suggest that domestic technology investments are necessary and sufficient for international diffusion.
Abstract: This paper surveys what is known about the extent of international technology diffusion and channels through which technology spreads. Productivity differences explain much of the variation in incomes across countries, and technology plays a key role in determining productivity. The pattern of worldwide technical change is determined largely by international technology diffusion because a few rich countries account for most of the world's creation of new technology. Cross-country income convergence turns on whether technology diffusion is global or local. There is no indication that international diffusion is inevitable or automatic, but rather, domestic technology investments are necessary. Better understanding of what determines the effectiveness of technology diffusion sheds light on the pace at which the world's technology frontier may expand.
1,669 citations
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6,503 citations
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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
TL;DR: In this article, the authors investigate the role of exporting in German firms' performance and find no positive effects on employment, wage or productivity growth after entry into the export market and conclude that success leads to exporting rather than the reverse.
Abstract: Exports and Success in German Manufacturing. - While Germany has a very open, export-oriented manufacturing sector, there has been little research on the role of exporting in German firms’ performance. This paper documents the significant differences between exporters and non-exporters and attempts to identify the sources of these disparities. Exporters are much larger, more capital-intensive, and more productive than non-exporters. However, the bulk of the evidence suggests that these performance characteristics predate the entry into export markets. The authors find no positive effects on employment, wage or productivity growth after entry. The authors’ results provide evidence that success leads to exporting rather than the reverse.
564 citations