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Internationalization choices: an ordered probit analysis at industry-level

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  • Pietrovito, Filomena
  • Pozzolo, Alberto Franco
  • Salvatici, Luca

Abstract

Trade theory traces back different patterns of internationalization to heterogeneity between firms, measured both through differences in productivity levels and size. In this paper we analyze the link between heterogeneity within sectors and internationalization choices, namely trade and foreign direct investments (FDI) for a large sample of countries and industries between 1994 and 2004. The focus of our paper is on the role played by average productivity level and the distribution of firms by size in explaining differences across sectors and countries in the extensive margin of internationalization (i.e., the number of foreign nations where firms from a given sector and country have expanded abroad). By performing an ordered probit analysis, and controlling for other factors affecting the patterns of internationalization, we confirm that industries with higher productivity levels and with a distribution of firms shifted toward large firms are more prone to internationalize in foreign markets through both trade and FDI. Moreover, the relative impact of average productivity and firm size on FDI is larger than that on trade. These results are robust to different measures of productivity and the distribution of firms.

Suggested Citation

  • Pietrovito, Filomena & Pozzolo, Alberto Franco & Salvatici, Luca, 2013. "Internationalization choices: an ordered probit analysis at industry-level," Economics & Statistics Discussion Papers esdp13071, University of Molise, Department of Economics.
  • Handle: RePEc:mol:ecsdps:esdp13071
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    2. Giorgio Barba Navaretti & Giacomo Calzolari & Alberto Franco Pozzolo & Maria Teresa Trentinaglia Daverio, 2019. "Few Large with Many Small: Banks Size Distribution and Cross-Border Financial Linkages," Journal of Financial Services Research, Springer;Western Finance Association, vol. 56(3), pages 229-258, December.
    3. Sen Guo & Huiru Zhao & Chunjie Li & Haoran Zhao & Bingkang Li, 2016. "Significant Factors Influencing Rural Residents’ Well-Being with Regard to Electricity Consumption: An Empirical Analysis in China," Sustainability, MDPI, vol. 8(11), pages 1-13, November.
    4. Li, Zheng & Hensher, David A., 2020. "Performance contributors of bus rapid transit systems: An ordered choice approach," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 154-161.
    5. Ruiz, Edward, 2014. "Elección de los modos de exportación: Evidencia de empresas peruanas," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 28, pages 61-76.

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    More about this item

    Keywords

    exports; foreign direct investments; mergers and acquisitions; productivity; distribution of firms; ordered probit;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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