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The Impact of Trade Costs on Firm Entry, Exporting, and Survival in Korea

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  • Kim, Sooil
  • Reimer, Jeffrey J.
  • Gopinath, Munisamy

Abstract

This study uses a unique firm-level dataset to examine how falling trade costs from 1993-2001 affected entry, exit, productivity, and exporting in the Korean manufacturing sector. We verify many of the predictions of recent heterogeneous-firm models of international trade. For example, falling trade costs reduced entry by new Korean firms, increased their probability of exit, and reduced the market share of surviving firms. We also find that small firms had a particularly high level of dynamism over the sample period. Small firms were more likely to enter and exit, and marginally more likely to gain market share, enter export markets for the first time, and improve their productivity.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49185.

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Date of creation: 2009
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Handle: RePEc:ags:aaea09:49185

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Keywords: Employment; Exit; Exports; Firm deaths; Survival; Trade costs; Agribusiness; Industrial Organization; International Development; International Relations/Trade; Labor and Human Capital; Marketing; Production Economics; Productivity Analysis; Research and Development/Tech Change/Emerging Technologies; F10; D24;

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  1. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
  2. Dennis Novy, 2011. "Gravity Redux: Measuring International Trade Costs with Panel Data," CESifo Working Paper Series 3616, CESifo Group Munich.
  3. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
  4. David S. Jacks & Christopher M. Meissner & Dennis Novy, 2006. "Trade Costs in the First Wave of Globalization," NBER Working Papers 12602, National Bureau of Economic Research, Inc.
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Cited by:
  1. Xiong, Bo & Beghin, John C., 2013. "Disentangling Demand-Enhancing And Trade-Cost Effects Of Maximum Residue Regulations," Staff General Research Papers 34393, Iowa State University, Department of Economics.

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