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Productivity gains from international trade in young and old economies

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  • Alam, M. Jahangir
  • Isakin, Maksim

Abstract

It is well established that international trade generates productivity gains within industries through the reallocation of inputs from less productive to more productive firms. Using European firm-level data from 2006 to 2014, we examine whether these productivity gains vary across economies with different average firm ages. Our results confirm that productivity gains from between-firm reallocation are larger in economies with greater exposure to international trade. Moreover, we find that these gains are approximately seven percent higher in economies in the bottom tertile of the firm–age distribution than in those in the top tertile. We show that this difference is driven by higher within-industry productivity dispersion in younger economies.

Suggested Citation

  • Alam, M. Jahangir & Isakin, Maksim, 2026. "Productivity gains from international trade in young and old economies," Journal of Macroeconomics, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:jmacro:v:88:y:2026:i:c:s0164070426000212
    DOI: 10.1016/j.jmacro.2026.103758
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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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