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International trade, exit and entry: A cross-country and industry analysis

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  • Italo Colantone

    (Erasmus University Rotterdam and ERIM, Rotterdam, The Netherlands)

  • Leo Sleuwaegen

    (Katholieke Universiteit Leuven and Vlerick Leuven Gent Management School, Leuven, Belgium)

Abstract

This paper examines the impact of globalisation, by means of growing international trade, on firm entry and exit at the industry level. The analysis is carried on the manufacturing industries of eight European countries, over the period 1997–2003. Our main findings suggest important entry-discouraging effects in the short run, following increased trade exposure. Using panel estimation techniques, the empirical evidence points to less creative replacement entry in industries characterised by substantial import intensity, and strong selection and higher entry barriers in industries characterised by higher openness through the export channel. The negative effects of trade openness are milder if the increasing trade exposure concerns intra-industry trade, coupled mainly with international sourcing of intermediates within the industry. The latter effects also show up in the model explaining the exit of firms, which we estimate jointly with entry.

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

Volume (Year): 41 (2010)
Issue (Month): 7 (September)
Pages: 1240-1257

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Handle: RePEc:pal:jintbs:v:41:y:2010:i:7:p:1240-1257

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Cited by:
  1. Veerle Miranda & Marialuz Moreno Badia & Ilke Van Beveren, 2012. "Globalization drives strategic product switching," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 148(1), pages 45-72, April.
  2. Schröder, Philipp J.H. & Sørensen, Allan, 2012. "Firm exit, technological progress and trade," European Economic Review, Elsevier, Elsevier, vol. 56(3), pages 579-591.
  3. Liu, Xiaohui & Hodgkinson, Ian R. & Chuang, Fu-Mei, 2014. "Foreign competition, domestic knowledge base and innovation activities: Evidence from Chinese high-tech industries," Research Policy, Elsevier, Elsevier, vol. 43(2), pages 414-422.
  4. Ina Charlotte Jäkel, 2013. "Import-push or Export-pull? An Industry-level Analysis of the Impact of Trade on Firm Exit," Economics Working Papers, School of Economics and Management, University of Aarhus 2013-20, School of Economics and Management, University of Aarhus.
  5. Antonios Georgopoulos & Felicitas Nowak-Lehmann D. & Vasilios Sogiakas, 2013. "Survival Characteristics and Adjustment of MNE Affiliates in the European Integrated Market," Ibero America Institute for Econ. Research (IAI) Discussion Papers, Ibero-America Institute for Economic Research 225, Ibero-America Institute for Economic Research.
  6. Michael Pflüger & Stephan Russek, 2013. "Business Conditions and Exit Risks Across Countries," Open Economies Review, Springer, Springer, vol. 24(5), pages 963-976, November.

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