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International trade, exit and entry: A cross-country and industry analysis

Author

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  • Italo Colantone

    (Erasmus University Rotterdam and ERIM, Rotterdam, The Netherlands)

  • Leo Sleuwaegen

    (Katholieke Universiteit Leuven and Vlerick Leuven Gent Management School, Leuven, Belgium)

Abstract

This paper examines the impact of globalisation, by means of growing international trade, on firm entry and exit at the industry level. The analysis is carried on the manufacturing industries of eight European countries, over the period 1997–2003. Our main findings suggest important entry-discouraging effects in the short run, following increased trade exposure. Using panel estimation techniques, the empirical evidence points to less creative replacement entry in industries characterised by substantial import intensity, and strong selection and higher entry barriers in industries characterised by higher openness through the export channel. The negative effects of trade openness are milder if the increasing trade exposure concerns intra-industry trade, coupled mainly with international sourcing of intermediates within the industry. The latter effects also show up in the model explaining the exit of firms, which we estimate jointly with entry.

Suggested Citation

  • Italo Colantone & Leo Sleuwaegen, 2010. "International trade, exit and entry: A cross-country and industry analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(7), pages 1240-1257, September.
  • Handle: RePEc:pal:jintbs:v:41:y:2010:i:7:p:1240-1257
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kafouros, Mario & Aliyev, Murod, 2016. "Institutional development and firm profitability in transition economies," Journal of World Business, Elsevier, vol. 51(3), pages 369-378.
    2. Schröder, Philipp J.H. & Sørensen, Allan, 2012. "Firm exit, technological progress and trade," European Economic Review, Elsevier, vol. 56(3), pages 579-591.
    3. David L. Rigby & Thomas Kemeny & Abigail Cooke, 2017. "Plant exit and U.S. imports from low-wage countries," International Economics, CEPII research center, issue 149, pages 27-40.
    4. repec:kap:jtecht:v:42:y:2017:i:5:d:10.1007_s10961-016-9479-2 is not listed on IDEAS
    5. Veerle Miranda & Marialuz Moreno Badia & Ilke Van Beveren, 2012. "Globalization drives strategic product switching," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(1), pages 45-72, April.
    6. Liu, Xiaohui & Hodgkinson, Ian R. & Chuang, Fu-Mei, 2014. "Foreign competition, domestic knowledge base and innovation activities: Evidence from Chinese high-tech industries," Research Policy, Elsevier, vol. 43(2), pages 414-422.
    7. Sara Amoroso & Bettina Mueller, 2017. "The short-run effects of Knowledge intensive greenfield FDI on new domestic entry," JRC Working Papers on Corporate R&D and Innovation 2017-02, Joint Research Centre (Seville site).
    8. Ina Jäkel, 2014. "Import-push or export-pull? An industry-level analysis of the impact of trade on firm exit," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 747-775, November.
    9. Antonios Georgopoulos & Felicitas Nowak-Lehmann D. & Vasilios Sogiakas, 2013. "Survival Characteristics and Adjustment of MNE Affiliates in the European Integrated Market," Ibero America Institute for Econ. Research (IAI) Discussion Papers 225, Ibero-America Institute for Economic Research.
    10. repec:spr:manint:v:51:y:2011:i:5:d:10.1007_s11575-011-0093-0 is not listed on IDEAS
    11. Michael Pflüger & Stephan Russek, 2013. "Business Conditions and Exit Risks Across Countries," Open Economies Review, Springer, vol. 24(5), pages 963-976, November.
    12. Ina Charlotte Jäkel, 2013. "Import-push or Export-pull? An Industry-level Analysis of the Impact of Trade on Firm Exit," Economics Working Papers 2013-20, Department of Economics and Business Economics, Aarhus University.

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