Barriers to Internationalization: Firm-Level Evidence from Germany
AbstractExporters and multinationals are larger and more productive than their domestic counterparts. In addition to productivity, financial constraints and labor market constraints might constitute barriers to entry into foreign markets. We present new empirical evidence on the extensive and intensive margin of exports and FDI based on detailed micro-level data of German firms. Our paper has three main findings. First, in line with earlier literature, we find a positive impact of firm size and productivity on firms’ international activities. Second, small firms suffer more frequently from financial constraints than bigger firms, but financial conditions have no strong effect on internationalization. Third, labor market constraints constitute a more severe barrier to foreign activities than financial constraints. Being covered by collective bargaining particularly impedes international activities.
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Bibliographic InfoPaper provided by Institut für Angewandte Wirtschaftsforschung (IAW) in its series IAW Discussion Papers with number 52.
Length: 26 pages
Date of creation: Sep 2009
Date of revision:
foreign direct investment; exports; firm heterogeneity; productivity; financial constraints; labor market constraints;
Find related papers by JEL classification:
- F2 - International Economics - - International Factor Movements and International Business
- G2 - Financial Economics - - Financial Institutions and Services
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-17 (All new papers)
- NEP-BEC-2009-10-17 (Business Economics)
- NEP-CSE-2009-10-17 (Economics of Strategic Management)
- NEP-EFF-2009-10-17 (Efficiency & Productivity)
- NEP-INT-2009-10-17 (International Trade)
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