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Exports versus FDI in German manufacturing: firm performance and participation in international markets

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Author Info
Arnold, Jens Matthias
Hussinger, Katrin

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Abstract

This paper tests some of the predictions of recent advances in trade theory that have focused on different trade patterns of firms within the same sector. Helpman, Melitz and Yeaple (2005) develop a model in which innate productivity differences between firms determine the degree of international engagement of firms: The least productive firms produce for the domestic market, better performers engage in export activities, and the top firms establish foreign subsidiaries. Using German firm-level data from 1996 to 2002, we test this prediction using non-parametric methods, by examining the distribution functions of the three subsets of firms for stochastic dominance. Rather than just comparing first moments, this technique allows us to compare productivity over the entire distribution. Our results show robust support for the prediction from theory. --

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Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2006,04.

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Date of creation: 2006
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Handle: RePEc:zbw:bubdp1:4241

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Related research
Keywords: Export; FDI; Heterogeneous firms; Total Factor Productivity;

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Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
F10 - International Economics - - Trade - - - General
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-44, September. [Downloadable!] (restricted)
  2. Delgado, Miguel A. & Farinas, Jose C. & Ruano, Sonia, 2002. "Firm productivity and export markets: a non-parametric approach," Journal of International Economics, Elsevier, vol. 57(2), pages 397-422, August. [Downloadable!] (restricted)
  3. Andrew B Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and productivity in international trade," Working Papers 00-08, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
  4. S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Head, Keith & Ries, John, 2003. "Heterogeneity and the FDI versus export decision of Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 448-467, December. [Downloadable!] (restricted)
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  6. G. Steven Olley & Ariel Pakes, 1992. "The Dynamics of Productivity in the Telecommunications Equipment Industry," NBER Working Papers 3977, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  8. Nina Pavcnik, 2000. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," NBER Working Papers 7852, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November. [Downloadable!] (restricted)
  10. Arnold, Jens & Smarzynska Javorcik, Beata, 2005. "Gifted Kids or Pushy Parents? Foreign Acquisitions and Plant Performance in Indonesia," CEPR Discussion Papers 5065, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
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  12. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Blackwell Publishing, vol. 70(2), pages 317-341, 04. [Downloadable!] (restricted)
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  13. Arnold, Jens Matthias & Hussinger, Katrin, 2004. "Export Behavior and Firm Productivity in German Manufacturing : A Firm-level Analysis," ZEW Discussion Papers 04-12, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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  14. Bee Yan Aw & Sukkyun Chung & Mark J. Roberts, 1998. "Productivity and the Decision to Export: Micro Evidence from Taiwan and South Korea," NBER Working Papers 6558, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco," NBER Working Papers 5715, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  16. Barba Navaretti, Giorgio & Castellani, Davide, 2004. "Investments Abroad and Performance at Home: Evidence from Italian Multinationals," CEPR Discussion Papers 4284, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  17. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March. [Downloadable!]
  18. Sourafel Girma & Richard Kneller & Mauro Pisu, 2005. "Exports versus FDI: An Empirical Test," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 193-218, July. [Downloadable!] (restricted)
  19. repec:rus:hseeco:122439 is not listed on IDEAS
  20. Andrew B. Bernard & J. Bradford Jensen, 2004. "Why Some Firms Export," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 561-569, 04. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Joachim Wagner, 2007. "Productivity and Size of the Export Market Evidence for West and East German Plants, 2004," Jena Economic Research Papers in Economics 2007-028, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek. [Downloadable!]
    Other versions:
  2. Joachim Wagner, 2006. "International Firm Activities and Innovation: Evidence from Knowledge Production Functions for German Firms," Working Paper Series in Economics 25, University of Lüneburg, Institute of Economics. [Downloadable!]
    Other versions:
  3. Giorgia Maffini & Socrates Mokkas, 2009. "Profit Shifting and Measured Productivity of Multinational Firms," Working Papers 0920, Oxford University Centre for Business Taxation. [Downloadable!]
  4. Joachim Wagner, 2007. "Exports and Productivity in Germany," Working Paper Series in Economics 41, University of Lüneburg, Institute of Economics. [Downloadable!]
    Other versions:
  5. Ingo Geishecker & Holger Görg & Daria Taglioni, 2008. "Characterizing Euro Area Multinationals," Kiel Working Papers 1413, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  6. Vivien Procher & Dirk Engel, 2009. "Export, FDI and Productivity – Evidence for French Firms," Ruhr Economic Papers 0111, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
  7. Giorgia Maffini & Socrates Mokkas, 2008. "Transfer-pricing and Measured Productivity of Multinational Firms," Working Papers 0817, Oxford University Centre for Business Taxation. [Downloadable!]
  8. Mitze, Timo & Alecke, Björn & Untiedt, Gerhard, 2008. "Trade, FDI and Cross-Variable Linkages: A German (Macro-)Regional Perspective," MPRA Paper 12245, University Library of Munich, Germany. [Downloadable!]
  9. Davide Castellani & Giorgia Giovannetti, 2009. "Productivity and the international firm: dissecting heterogeneity," Development Working Papers 270, Centro Studi Luca d\'Agliano, University of Milano. [Downloadable!]
  10. Yama Temouri & Nigel L. Driffield & Dolores Añón Higón, 2008. "Analysis of Productivity Differences among Foreign and Domestic Firms: Evidence from Germany," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(1), pages 32-54, April. [Downloadable!] (restricted)
  11. Joel Stiebale & Frank Reize, 2008. "The Impact of FDI on Innovation in Target Firms," Ruhr Economic Papers 0050, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
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