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Import Competition, Domestic Regulation and Firm-Level Productivity Growth in the OECD

  • Sarra Ben Yahmed
  • Sean Dougherty

This paper examines how import penetration affects firms' productivity growth taking into account the heterogeneity in firms' distance to the efficiency frontier and country differences in product market regulation. Using firm-level data for a large number of OECD countries, the analysis reveals non-linear effects of both sectoral import penetration and de jure product market regulation measures depending on firms' positions along the global distribution of productivity levels. The heterogeneous effects of international competition and domestic product market regulation on firm-level productivity growth are consistent with a neo-Schumpeterian view of trade and regulation. Close to the technology frontier, import competition has a strongly positive effect on firm-level productivity growth, with stringent domestic regulation reducing this effect substantially. However, far from the frontier, neither import competition nor its interaction with domestic regulation has a statistically significant effect on firm-level productivity growth. The results suggest that insufficient attention has been made in the trade literature to within-firm productivity growth. Concurrence des importations, réglementation interne et croissance de la productivité niveau de l'entreprise dans les pays de l'OCDE Ce document explore les effets des importations sur la croissance de la productivité des entreprises, tout en tenant compte des différences de positionnement des entreprises par rapport à leur frontière technologique et des différences de réglementation des marchés des biens entre les pays. En utilisant des données de firmes pour un grand nombre de pays de l’OCDE, l’analyse fait apparaître des effets non linéaires des importations ainsi que des dispositions légales concernant les marchés des biens sur la croissance de la productivité des entreprises. Ce résultat est conforme à une conception néo-Schumpétérienne des effets des échanges et de la réglementation sur la productivité. Pour les entreprises proches de la frontière technologique, la concurrence étrangère a un effet fortement positif sur la croissance de la productivité, tandis qu’une réglementation interne stricte réduit sensiblement cet effet. En revanche, pour les entreprises loin de la frontière technologique, ni la concurrence étrangère ni son interaction avec la réglementation nationale n’ont d’effet statistiquement significatif sur la croissance de la productivité. Les résultats obtenus montrent que les analyses désagrégées, au niveau de la firme, sont un terrain prometteur pour la littérature qui a été jusque là davantage centrée sur les réallocations et la croissance au niveau sectoriel.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 980.

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Date of creation: 03 Sep 2012
Date of revision:
Handle: RePEc:oec:ecoaaa:980-en
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  1. Pinelopi K. Goldberg & Amit Khandelwal & Nina Pavcnik & Petia Topalova, 2008. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," NBER Working Papers 14416, National Bureau of Economic Research, Inc.
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  7. Bas, Maria & Strauss-Kahn, Vanessa, 2010. "Does importing more inputs raise exports? Firm level evidence from France," MPRA Paper 27315, University Library of Munich, Germany.
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  9. Amiti, Mary & Konings, Jozef, 2005. "Trade Liberalization, Intermediate Inputs and Productivity: Evidence from Indonesia," CEPR Discussion Papers 5104, C.E.P.R. Discussion Papers.
  10. Anita Wölfl & Isabelle Wanner & Tomasz Koźluk & Giuseppe Nicoletti, 2009. "Ten Years of Product Market Reform in OECD Countries: Insights from a Revised PMR Indicator," OECD Economics Department Working Papers 695, OECD Publishing.
  11. Natalie Chen & Jean Imbs & Andrew Scott, 2006. "The dynamics of trade and competition," Working Paper Research 91, National Bank of Belgium.
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  13. Lori G. Kletzer, 2002. "Imports, Exports, and Jobs: What Does Trade Mean for Employment and Job Loss?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number iej, November.
  14. Matthieu Crozet & Emmanuel Milet & Daniel Mirza, 2013. "The Discriminatory Effect of Domestic Regulations on International Trade in Services: Evidence from Firm-Level Data," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00801398, HAL.
  15. repec:dau:papers:123456789/6910 is not listed on IDEAS
  16. Caves, Douglas W & Christensen, Laurits R & Tretheway, Michael W, 1980. "Flexible Cost Functions for Multiproduct Firms," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 477-81, August.
  17. Paul Conway & Donato de Rosa & Giuseppe Nicoletti & Faye Steiner, 2006. "Product market regulation and productivity convergence," OECD Economic Studies, OECD Publishing, vol. 2006(2), pages 39-76.
  18. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
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