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

Author

Listed:
  • Sarra Ben Yahmed
  • Sean Dougherty

    (OECD)

Abstract

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.

Suggested Citation

  • Sarra Ben Yahmed & Sean Dougherty, 2012. "Import Competition, Domestic Regulation and Firm-Level Productivity Growth in the OECD," OECD Economics Department Working Papers 980, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:980-en
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    File URL: http://dx.doi.org/10.1787/5k92zp0wmm34-en
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    References listed on IDEAS

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    Cited by:

    1. Bartelsman, Eric & Dobbelaere, Sabien & Peters, Bettina, 2013. "Allocation of Human Capital and Innovation at the Frontier: Firm-Level Evidence on Germany and the Netherlands," IZA Discussion Papers 7540, Institute for the Study of Labor (IZA).
    2. Olper, Alessandro & Pacca, Lucia & Curzi, Daniele, 2014. "Trade, import competition and productivity growth in the food industry," Food Policy, Elsevier, vol. 49(P1), pages 71-83.
    3. Sean M. Dougherty, 2014. "Legal Reform, Contract Enforcement and Firm Size in Mexico," Review of International Economics, Wiley Blackwell, vol. 22(4), pages 825-844, September.
    4. Bruno AMABLE & Iván LEDEZMA, 2013. "Export Performance And Product Market Regulation," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 37, pages 231-258.
    5. Tinh Doan & Son Nguyen & Tuyen Tran & Huong Vu & Steven Lim, 2014. "Does Rising Import Competition Harm Local Firm Productivity in Less Advanced Economies? Evidence from Vietnam's Manufacturing Sector," Working Papers in Economics 14/09, University of Waikato.

    More about this item

    Keywords

    behind-the-border regulatory barriers; concurrence étrangère; Croissance de la productivité des entreprises; Firm productivity growth; import competition; international trade; product market regulation; réglementation nationale des marchés des biens; échanges internationaux;

    JEL classification:

    • F1 - International Economics - - Trade
    • K2 - Law and Economics - - Regulation and Business Law
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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