Firm-level interactions between exporting and productivity: Industry-specific evidence

This paper investigates interactions between exporting and productivity at the firm level, using a panel of firms in the UK chemical industry. This is both highly technology intensive and the UK’s largest exporting sector. We find exporters are more productive than non-exporters, but are also on average smaller. This superior productivity performance among exporters appears to be caused by both self-selection and learning-by-exporting effects. In contrast to other studies, we find learning effects are significantly positive among new entrants, weaker for more experienced exporters and negative for established exporters. JEL no. F14, D21, L65     

Intra-industry trade with multinational firms

Recent developments, including the analysis of firm-level adjustment to falling trade costs, have contributed to a revival of interest in intra-industry trade (IIT). Most empirical work still relies on the standard Grubel-Lloyd measure. This however refers only to international trade, disregarding income flows stimulated by repatriated profits of multinational firms. Given the overwhelming importance of the latter, this is a major shortcoming. This paper provides a guide to measurement and estimation of the determinants of bilateral IIT shares from the perspective of new trade theory with multinational firms. We develop an analytically solvable general equilibrium model to investigate the impact of investment costs, multinational activities and income flows from repatriated profits. We also discuss and quantify the bias of the Grubel-Lloyd index associated with repatriated profit flows of multinationals. Using bias-corrected versions of the Grubel-Lloyd index as the dependent variable, we demonstrate that the determinants motivated by our theoretical analysis offer important insights into variations in IIT shares.     

Does Exporting Increase Productivity? A Microeconometric Analysis of Matched Firms

Exporting involves sunk costs, so some firms export whilst others do not. This proposition derives from a number of models of firm behavior and has been exposed to microeconometric analysis. Evidence from the latter suggests that exporting firms are generally more productive than nonexporters. They self‐select, in that they are more productive before they enter export markets, but the evidence suggests that entry does not make them any more productive. This paper investigates exporting and firm performance for a large panel of UK manufacturing firms, applying matching techniques. The authors find that exporters are more productive and they do self‐select. In contrast to other evidence, however, exporting further increases firm productivity.     

Industry Differences in the Effect of Export Market Entry: Learning by Exporting?

An extensive evidence base affirms the importance of sunk costs and firm heterogeneity to exporting. Only higher productivity firms can profitably cover sunk costs and enter export markets. This is the standard explanation for the regularity with which econometric analyses report that exporters are more productive than non-exporters. But what happens to their productivity trajectory once they have entered? Some theory points to the possibility of a further productivity boost, attributable to the effects of learning and competition. We investigate whether this is because the potential for a post-entry boost depends upon how exposed to competition the firm is. We find that industry differences are an important marker for determining whether learning effects boost productivity after export market entry.     

Exporting and Productivity in the United Kingdom

This paper investigates various aspects of the links betweenexporting and productivity for a large sample of firms in theUnited Kingdom. We find evidence to support the propositionthat sunk costs are important. Self selection takes place, withlarger and more productive firms entering export markets, andfirms have to become more productive in order to enter. Industrycharacteristics also affect the likelihood of entry—bothindustrial and spatial agglomeration are important. When werely on an unmatched sample of firms we can find some evidenceof further productivity improvement after entry, but this disappearswhen we use a matched sample. Our results suggest that policyshould avoid simply subsidizing firms that may self select intoexport promotion policies and focus instead on reducing informationasymmetries and supporting development of clusters.     

Surviving globalisation

This paper investigates the effects of international trade on firms' strategies for industry exit, either via closedown, switching industry or being acquired. We use a rich dataset of Swedish firms that extends over two decades to track firm choices between alternative strategies. We find that higher levels of international competition increase the probability of exit by merger and closedown. If trade is more intra-industry in character, the effect of import penetration on the probability of exit is less. The probability of exit by switching industry is higher in revealed comparative disadvantage industries. Finally, we find that the geographical source of international competition is important, the effects of trade on exit being strongest when trading partners are other OECD countries.