IDEAS home Printed from https://ideas.repec.org/p/ags/aaea13/149742.html
   My bibliography  Save this paper

Credit Constraints, Technology Choice and Exports - A Firm Level Study for Latin American Countries

Author

Listed:
  • Hasan, Syed M.

Abstract

This paper introduces technology choice and credit access constraints in Melitz (2003) model under a dynamic setting to explain the factors that limit the prospects of a firm from availing trade liberalization benefits. Two such constraints which are specifically relevant in a developing country context are firm's access to credit and frontier level technology. The theoretical model confirms that firms face varying levels of credit constraints depending on their initial productivity and small firms are more constrained compared to large firms. Thus credit constrained firms operating below the production frontier may never be able to cross the minimum productivity threshold required to enter and sustain in a foreign market. The empirical evidence of the model is derived by analyzing the firm level data for five Latin American countries. The empirical findings indicate that firms are constrained both in technology adoption and the extensive margin of trade The study is significant as it focuses on firm level constraints which impact a country's participation in international trade by analyzing both theoretically and empirically the impact of credit constraints on the extensive and intensive margins of trade. An important policy implication of this study, for increasing exports, could be the diversion of public resources from subsidizing production to extending credits to prospective exporters which will ultimately result in directing resources towards more productive sectors of the economy.

Suggested Citation

  • Hasan, Syed M., 2013. "Credit Constraints, Technology Choice and Exports - A Firm Level Study for Latin American Countries," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149742, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea13:149742
    as

    Download full text from publisher

    File URL: http://purl.umn.edu/149742
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ricardo J. Caballero, 2000. "Structural Volatility in Chile: A Policy Report," Research Department Publications 4211, Inter-American Development Bank, Research Department.
    2. Kalina Manova, 2013. "Credit Constraints, Heterogeneous Firms, and International Trade," Review of Economic Studies, Oxford University Press, vol. 80(2), pages 711-744.
    3. Florian MAYNERIS, 2011. "A new perspective on the firm size-growth relationship: Shape of profits, investment and heterogeneous credit constraints," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2011044, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2007. "Comparative Advantage and Heterogeneous Firms," Review of Economic Studies, Oxford University Press, vol. 74(1), pages 31-66.
    5. Sofronis K. Clerides & Saul Lach & James R. Tybout, 1998. "Is Learning by Exporting Important? Micro-Dynamic Evidence from Colombia, Mexico, and Morocco," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 903-947.
    6. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    7. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    8. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    9. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    10. Greenaway, David & Guariglia, Alessandra & Kneller, Richard, 2007. "Financial factors and exporting decisions," Journal of International Economics, Elsevier, vol. 73(2), pages 377-395, November.
    11. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    12. Ricardo J. Caballero, 2000. "Structural Volatility in Chile: A Policy Report," Research Department Publications 4211, Inter-American Development Bank, Research Department.
    13. Maria Angelica Arbelaez & Juan Jose Echavarria, 2002. "Credit, Financial Liberalization and Manufacturing Investment in Colombia," Research Department Publications 3145, Inter-American Development Bank, Research Department.
    14. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-685, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joachim Wagner, 2014. "Credit constraints and exports: a survey of empirical studies using firm-level data," Industrial and Corporate Change, Oxford University Press, vol. 23(6), pages 1477-1492.
    2. Sandra M. Leitner, 2015. "Firm growth and financing constraints in the NMS-10 and the Western Balkan countries – a comparative analysis," wiiw Balkan Observatory Working Papers 115, The Vienna Institute for International Economic Studies, wiiw.
    3. Deniz Baglan & Hakan Yilmazkuday, 2016. "Financial Health and the Intensive Margin of Trade," Working Papers 1607, Florida International University, Department of Economics.
    4. repec:mth:ber888:v:7:y:2017:i:1:p:227-241 is not listed on IDEAS
    5. Sandra M. Leitner & Robert Stehrer, 2016. "The Role of Financial Constraints for Different Innovation Strategies: Evidence for CESEE and FSU Countries," wiiw Working Papers 125, The Vienna Institute for International Economic Studies, wiiw.
    6. Michael Landesmann & Sandra M. Leitner & Robert Stehrer, 2016. "Changing Patterns in M&E-Investment-Based Innovation Strategies in CESEE and FSU Countries," wiiw Working Papers 123, The Vienna Institute for International Economic Studies, wiiw.

    More about this item

    Keywords

    Credit; Innovation; Constraints; Firm; Export; Monopolistic; Technology; International Development; International Relations/Trade; Productivity Analysis; F12; F14; F16;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea13:149742. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/aaeaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.