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The life-cycle dynamics of exporters and multinational firms

Author

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  • Gumpert, Anna
  • Li, Haishi
  • Moxnes, Andreas
  • Ramondo, Natalia
  • Tintelnot, Felix

Abstract

This paper studies the life-cycle dynamics of exporters and multinational enterprises (MNEs). Using rich firm-level data, we document a comprehensive set of facts on entry, exit, and growth of new exporters and new MNEs. Guided by these facts, we build a model based on the standard proximity-concentration trade-off extended to incorporate time-varying firm productivity and sunk costs of MNE entry. The calibrated version of the model goes far in matching cross-sectional and dynamic moments of the data on exporters and MNEs. Our results point to much higher sunk costs for MNE than for export activities. Finally, we show how including the choice to become an MNE affects the predicted export dynamics after a trade liberalization episode.

Suggested Citation

  • Gumpert, Anna & Li, Haishi & Moxnes, Andreas & Ramondo, Natalia & Tintelnot, Felix, 2020. "The life-cycle dynamics of exporters and multinational firms," Journal of International Economics, Elsevier, vol. 126(C).
  • Handle: RePEc:eee:inecon:v:126:y:2020:i:c:s0022199620300593
    DOI: 10.1016/j.jinteco.2020.103343
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    Cited by:

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    3. Daniel Baumgarten & Michael Irlacher & Karin Mayr-Dorn, 2020. "Internationalization strategies of multi-product firms: The role of technology," Economics working papers 2020-14, Department of Economics, Johannes Kepler University Linz, Austria.
    4. Anderson, James E. & Larch, Mario & Yotov, Yoto V., 2019. "Trade and investment in the global economy: A multi-country dynamic analysis," European Economic Review, Elsevier, vol. 120(C).
    5. Feng Liu & Kwangtae Park & Unjung Whang, 2019. "Organizational Capabilities, Export Growth and Job Creation: An Investigation of Korean SMEs," Sustainability, MDPI, Open Access Journal, vol. 11(14), pages 1-16, July.
    6. Ivan DESEATNICOV & FUJII Daisuke & Konstantin KUCHERYAVYY & SAITO Yukiko, 2020. "Why Do Japanese MNEs Enter and Exit Foreign Markets?," Discussion papers 20055, Research Institute of Economy, Trade and Industry (RIETI).
    7. Daniel Baumgarten & Michael Irlacher & Karin Mayr-Dorn, 2020. "Internationalization strategies of multi-product firms: The role of technology," Economics working papers 2020-14, Department of Economics, Johannes Kepler University Linz, Austria.

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    More about this item

    Keywords

    International trade; Exporters; Multinational firm; Markov process; Sunk cost; Proximity-concentration trade-off; Trade liberalization;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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