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Reassessing the link between firm size and exports

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  • Pedro J. Hernández

    (Universidad de Murcia)

Abstract

This paper re-examines the link between firm size and exports. The new theories of international trade emphasize firm heterogeneity as the theoretical basis of export behavior. In the context of this heterogeneity, this paper uses the quantile regression methodology to analyze the effects of firm size on firm export propensity (percentage of exported sales). The paper confirms the existence of a positive relationship between firm size and export propensity but finds that the conventional estimates of the elasticity of export propensity with respect to firm size on the average of the export propensities’ distribution underestimate the effect at the bottom of the distribution and overestimate the effect on the rest. Consequently, policies aimed at increasing exports should focus their efforts on increasing the size of those firms with a lower export propensity.

Suggested Citation

  • Pedro J. Hernández, 2020. "Reassessing the link between firm size and exports," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(2), pages 207-223, June.
    • Handle: RePEc:spr:eurasi:v:10:y:2020:i:2:d:10.1007_s40821-019-00126-9
    DOI: 10.1007/s40821-019-00126-9
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    References listed on IDEAS

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    More about this item

    Keywords

    Exports; Firm heterogeneity; Firm size; Quantile regression;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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