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Trade and Growth with Heterogeneous Firms

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Author Info
Baldwin, Richard
Robert-Nicoud, Frédéric

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Abstract

This paper explores the impact of trade on growth when firms are heterogeneous. Our findings can be viewed as relevant to the trade and growth literature on one hand and the heterogeneous-firms trade theory on the other. Our main finding – that freer trade is both anti-growth and welfare worsening from a purely dynamic perspective – contrasts with most findings in the endogenous growth literature. We also show that market-entry costs are anti-growth, but heterogeneity per se is pro-growth. As concerns the heterogeneous-firms literature our main finding is a static-vs.-dynamic trade-off in terms of productivity gains. Freer trade raises measured productivity in a level sense but slows measured productivity growth.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4965.

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Date of creation: Mar 2005
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Handle: RePEc:cpr:ceprdp:4965

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Related research
Keywords: dynamic versus static efficiency heterogeneous firms trade and endogenous growth

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Find related papers by JEL classification:
H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  9. Baldwin, Richard & Forslid, Rikard, 2004. "Trade Liberalization with Heterogenous Firms," CEPR Discussion Papers 4635, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fugazza, Marco & Robert-Nicoud, Frédéric, 2006. "Can South-South Trade Liberalisation Stimulate North-South Trade?," CEPR Discussion Papers 5699, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Richard E. Baldwin & Rikard Forslid, 2006. "Trade Liberalization with Heterogenous Firms," NBER Working Papers 12192, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Antonio Navas-Ruiz & Davide Sala, 2007. "Technology Adoption and the Selection Effect of Trade," Economics Working Papers ECO2007/58, European University Institute. [Downloadable!]
    Other versions:
  4. Toshihiro Okubo & Vincent Rebeyrol, 2006. "Home Market Effect and Regulation Costs - Homogeneous Firm and Heterogeneous Firm Trade Models," HEI Working Papers 02-2006, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
  5. Andrew Atkeson & Ariel Burstein, 2007. "Innovation, Firm Dynamics, and International Trade," Levine's Working Paper Archive 122247000000001423, UCLA Department of Economics. [Downloadable!]
    Other versions:
  6. Tetsugen Haruyama & Laixun Zhao, 2008. "Trade and Firm Heterogeneity In A Quality-Ladder Model of Growth," Discussion Paper Series 223, Research Institute for Economics & Business Administration, Kobe University. [Downloadable!]
  7. Baldwin, Richard & Robert-Nicoud, Frédéric, 2006. "Trade and Growth with Heterogenous Firms," CEPR Discussion Papers 5563, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  8. Bulent Unel, . "Technology Diffusion through Trade with Heterogeneous Firms," Departmental Working Papers 2006-15, Department of Economics, Louisiana State University. [Downloadable!]
  9. Alberto Amurgo-Pacheco, Martha Denisse Pierola, 2007. "Patterns of export diversification in developing countries: intensive and extensive margins," HEI Working Papers heiwp20-2007, Economics Section, The Graduate Institute of International Studies, revised Jul 2007. [Downloadable!]
    Other versions:
  10. Toshihiro Okubo & Vincent Rebeyrol, 2006. "Home Market Effect, regulation costs and heterogeneous firms," Cahiers de la Maison des Sciences Economiques bla06056, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
    Other versions:
  11. Bulent Unel, . "Firm Heterogeneity, Trade, and Wage Inequality," Departmental Working Papers 2008-02, Department of Economics, Louisiana State University. [Downloadable!]
  12. Maria Bas & Ivan Ledezma, 2006. "The impact of trade reforms on the extensive margin of trade," PSE Working Papers 2006-36, PSE (Ecole normale supérieure). [Downloadable!]
  13. Facundo Albornoz & Paolo Vanin, 2007. "Trade Policy and Industrial Structure," Discussion Papers 05-12R, Department of Economics, University of Birmingham. [Downloadable!]
  14. Jan Bruha & Jiri Podpiera, 2007. "Inquiries on dynamics of transition economy convergence in a two-country model," Working Paper Series 791, European Central Bank. [Downloadable!]
  15. Gustafsson, Peter & Segerstrom, Paul, 2006. "Trade Liberalization and Productivity Growth," CEPR Discussion Papers 5894, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  16. George Alessandria & Horag Choi, 2007. "Establishment heterogeneity, exporter dynamics, and the effects of trade liberalization," Working Papers 07-17, Federal Reserve Bank of Philadelphia. [Downloadable!]
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