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Trade Complexity and Productivity

Author

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  • Gabor Békés

    (Hungarian Academy of Science)

  • Carlo Altomonte

    (AM - Bocconi University, KITeS and FEEM)

Abstract

We exploit a panel dataset of Hungarian firms merged with product-level trade data for the period 1992-2003 to investigate the relation between firms' trading activities (importing, exporting or both) and productivity. We find important self-selection effects of the most productive firms induced by the existence of heterogeneous sunk costs of trade, for both importers and exporters. We relate these sunk costs of trade to the relationship-specific nature of the trade activities, entailing a certain degree of technological and organizational complexity. We also show that, to the extent that imports and exports are correlated within firms, failing to control for the importing activity leads to overstated average productivity premia of exporters.

Suggested Citation

  • Gabor Békés & Carlo Altomonte, 2009. "Trade Complexity and Productivity," Working Papers 2009.62, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2009.62
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    File URL: https://www.feem.it/m/publications_pages/NDL2009-062.pdf
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    More about this item

    Keywords

    Trade Openness; Firms' Heterogeneity; Productivity;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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