New Dimensions of Adjustment to Globalization
AbstractUsing firm-level data for Estonia for the years 1997-2005, we analyze the impact of international competition on firm dynamics, considering both firm closedown and product switching. This paper contributes to the literature in two important ways: (1) this is the first paper to study the determinants of exit and product switching in an emerging market; and (2) we consider explicitly the role of export opportunities. Our results indicate that globalization affects firm closure and product switching differently. In particular, firm exit is positively related to the degree of intra-industry trade while the decision to switch is affected only by the conditions in export markets. This is in sharp contrast to previous findings for industrial countries.
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Bibliographic InfoPaper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 20908.
Date of creation: 2008
Date of revision:
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Product switching; Exit; International trade; Comparative Advantage;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- F18 - International Economics - - Trade - - - Trade and Environment
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
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