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Importing, Exporting, and Innovation in Developing Countries

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  • Murat Şeker

Abstract

Recent studies have shown that not only exporters but also importers perform better than firms that do not trade. Using a detailed firm level dataset from 43 developing countries, I show that there are persistent differences in evolution of firms when they are grouped according to their trade orientation as: two-way traders (both importing and exporting), only exporters, only importers, and non-traders. Extending the existing models of firm evolution in open economies by incorporating importing decision, I show that: i) globally engaged firms are larger, more productive, and grow faster than non-traders; ii) two-way traders are the fastest growing and most innovative group who are followed by only-exporters; iii) estimating export premium without controlling for import status is likely to overestimate the actual value by capturing the import premium; and iv) R&D investment contributes to growth of traders significantly more than to non-traders. Finally I show the robustness of the findings by providing evidence from the panel data constructed from the original dataset and controlling for variables that are likely to affect firm growth.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 20 (2012)
Issue (Month): 2 (05)
Pages: 299-314

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Handle: RePEc:bla:reviec:v:20:y:2012:i:2:p:299-314

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Cited by:
  1. David Aristei & Davide Castellani & Chiara Franco, 2011. "Firms' exporting and importing activities: is there a two-way relationship?," Quaderni del Dipartimento di Economia, Finanza e Statistica 99/2011, Università di Perugia, Dipartimento Economia, Finanza e Statistica.
  2. Seker, Murat, 2011. "Trade Policies, Investment Climate,and Exports," MPRA Paper 29905, University Library of Munich, Germany.
  3. Seker, Murat, 2011. "Effects of licensing reform on firm innovation : evidence from India," Policy Research Working Paper Series 5876, The World Bank.
  4. Şeker, Murat & Yang, Judy S., 2014. "Bribery solicitations and firm performance in the Latin America and Caribbean region," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 246-264.
  5. Seker, Murat, 2011. "Trade policies, investment climate, and exports across countries," Policy Research Working Paper Series 5654, The World Bank.
  6. María D. Parra & Inmaculada Martínez-Zarzoso, 2014. "Imported intermediate inputs and Egyptian exports: Exploring the links," Working Papers 2014/09, Economics Department, Universitat Jaume I, Castellón (Spain).

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