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Export Intensity and Productivity

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Author Info
Rosario Crinò (Institut d’Analisi Economica CSIC, Barcelona)
Paolo Epifani (Department of Economics, and KITeS, Bocconi University, Milan)

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Abstract

We study, both theoretically and empirically, how export intensity (the ratio of exports to sales) is related to firm productivity. Using a representative sample of Italian manufacturing firms, we find that Total Factor Productivity (TFP) is strongly negatively correlated with export intensity to low-income destinations and uncorrelated with export intensity to high-income destinations, conditional on exporting. To account for these facts, which are not easily predicted by existing heterogeneous-firms models, we extend the Melitz’s (2003) model by allowing for endogenous product quality and for non-iceberg trade costs. Under plausible assumptions, our model predicts that the elasticity of export intensity to productivity is increasing in per capita income of the foreign destinations and decreasing in their distance. We find that these two variables can jointly explain the sign, size and ranking of the TFP elasticities of export intensity across individual foreign destinations.

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Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 271.

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Date of creation: 01 Jun 2009
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Handle: RePEc:csl:devewp:271

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Related research
Keywords: Export Intensity; TFP; Heterogeneous Firms; Product Quality; Per Unit Trade Costs.;

Find related papers by JEL classification:
F1 - International Economics - - Trade

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