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Importing, Exporting, and Innovation in Developing Countries

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  • Seker, Murat

Abstract

Several recent studies have shown that not only exporters but also importers perform better than firms that do not trade. Using a detailed firm level dataset from 43 developing countries, I show that there are persistent differences in evolution of firms when they are grouped according to their trade orientation as: two-way traders (both importing and exporting), only exporters, only importers, and non-traders. Extending the existing models of firm evolution in open economies by incorporating importing decision, I provide a simple model and empirically show that: i) globally engaged firms are larger, more productive, and grow faster than non-traders; ii) two-way traders are the fastest growing and most innovative group who are followed by only-exporters; and iii) estimating export premium without controlling for import status is likely to overestimate the actual value by capturing the import premium. Finally I show the robustness of the findings by providing evidence from the panel data constructed from the original dataset and controlling for variables that are likely to affect firm growth.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29904.

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Date of creation: Oct 2009
Date of revision: Feb 2011
Handle: RePEc:pra:mprapa:29904

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Keywords: Globally engaged firms; trade in developing countries; R&D and innovation; firm and industry dynamics;

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References

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Citations

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Cited by:
  1. David Aristei & Davide Castellani & Chiara Franco, 2013. "Firms’ exporting and importing activities: is there a two-way relationship?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 149(1), pages 55-84, March.
  2. Seker, Murat, 2011. "Effects of licensing reform on firm innovation : evidence from India," Policy Research Working Paper Series 5876, The World Bank.
  3. María D. Parra & Inmaculada Martínez-Zarzoso, 2014. "Imported intermediate inputs and Egyptian exports: Exploring the links," Working Papers 2014/09, Economics Department, Universitat Jaume I, Castellón (Spain).
  4. Şeker, Murat & Yang, Judy S., 2014. "Bribery solicitations and firm performance in the Latin America and Caribbean region," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 246-264.
  5. Seker, Murat, 2011. "Trade Policies, Investment Climate,and Exports," MPRA Paper 29905, University Library of Munich, Germany.
  6. Seker, Murat, 2011. "Trade policies, investment climate, and exports across countries," Policy Research Working Paper Series 5654, The World Bank.

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