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Trade Complexity and Productivity

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Author Info

  • Carlo Altomonte

    ()
    (IAM - Bocconi University, KITeS and FEEM, Milan)

  • Gabor Békés

    ()
    (Institute of Economics, Hungarian Academy of Science. Corresponding author: IE-HAS, 1112 Budaorsi ut 45, Budapest, Hungary.)

Abstract

We exploit a panel dataset of Hungarian firms merged with product-level trade data for the period 1992-2003 to investigate the relation between firms' trading activities (importing, exporting or both) and productivity. We find important self-selection effects of the most productive firms induced by the existence of heterogeneous sunk costs of trade, for both importers and exporters. We relate these sunk costs of trade to the relationship-specific nature of the trade activities, entailing a certain degree of technological and organizational complexity. We also show that, to the extent that imports and exports are correlated within firms, failing to control for the importing activity leads to overstated average productivity premia of exporters.

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File URL: ftp://ftp.unibocconi.it/pub/RePEc/cri/papers/KitesWP16.pdf
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Bibliographic Info

Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 016.

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Length: 34 pages
Date of creation: Jul 2009
Date of revision: Jul 2009
Handle: RePEc:cri:cespri:kites16_wp

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Web page: http://www.kites.unibocconi.it/

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Related research

Keywords: trade openness; firms' heterogeneity; productivity;

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References

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  1. Halpern, László & Koren, Miklós & Szeidl, Adam, 2005. "Imports and Productivity," CEPR Discussion Papers 5139, C.E.P.R. Discussion Papers.
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  13. Costas Arkolakis, 2010. "Market Penetration Costs and the New Consumers Margin in International Trade," Journal of Political Economy, University of Chicago Press, vol. 118(6), pages 1151 - 1199.
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  18. Davide Castellani & Francesco Serti & Chiara Tomasi, 2008. "Firms in International Trade: Importers and Exporters Heterogeneity in the Italian Manufacturing Industry," LEM Papers Series 2008/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  19. Bernard, Andrew & Jensen, J Bradford & Redding, Stephen J & Schott, Peter, 2007. "Firms in International Trade," CEPR Discussion Papers 6277, C.E.P.R. Discussion Papers.
  20. Wolfgang Keller & Stephen R. Yeaple, 2008. "Global Production and Trade in the Knowledge Economy," NBER Working Papers 14626, National Bureau of Economic Research, Inc.
  21. Hiroyuki Kasahara & Joel Rodrigue, 2005. "Does the Use of Imported Intermediates Increase Productivity? Plant-Level Evidence," University of Western Ontario, Economic Policy Research Institute Working Papers 20057, University of Western Ontario, Economic Policy Research Institute.
  22. Alla Lileeva & Daniel Trefler, 2010. "Improved Access to Foreign Markets Raises Plant-Level Productivity... for Some Plants," The Quarterly Journal of Economics, MIT Press, vol. 125(3), pages 1051-1099, August.
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