Credit Constraints,Technology Choice and Exports: A Firm‐level Study for Latin American Countries |
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Authors: | Syed Hasan Ian Sheldon |
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Institution: | 1. Department of Economics, Lahore University of Management Sciences, Lahore, Pakistan;2. Agricultural, Environmental and Development Economics, Ohio State University, Columbus, OH, USA |
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Abstract: | In this paper, constraints on technology choice and credit access are introduced into a firm‐level trade model in a dynamic setting in order to explain factors that limit benefits to a firm from trade liberalization. Theoretical analysis shows that firms face credit constraints depending on their initial productivity and the cost of credit. As a result, credit‐constrained firms may not be able to cross the minimum productivity threshold needed to enter and compete in a foreign market. Empirical analysis using firm‐level panel data for six Latin American countries confirms that financial constraints negatively influence firms' export and investment decisions. |
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