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Productivity, size and exporting dynamics of firms: Evidence for Mexico

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  • Cardoso-Vargas, Carlos Enrique

Abstract

This paper examines the relationship between size and productivity on the export dynamics of a developing country like Mexico. The theoretical framework that guides the empirical evaluation is based on a simple model inspired by Melitz (2003). The results suggest that differences in size and productivity of firms indicate who will be able to internationalize and which markets can sell. According to estimates there are other feasible locations to replace the neighboring market of North America as the main buyer; however, the limiting factor for achieving this goal would be the low productivity of firms. In particular, it is that if transport costs are doubled, as is expected in destinations beyond the area of North America, would imply an increase in productivity of the firms of at least 9%. Finally, we find that the financial crisis caused a selection effect with respect to firms with higher productivity, while those firms that reported very low levels of productivity ceased its export activities

Suggested Citation

  • Cardoso-Vargas, Carlos Enrique, 2015. "Productivity, size and exporting dynamics of firms: Evidence for Mexico," MPRA Paper 68425, University Library of Munich, Germany, revised 09 Jul 2015.
  • Handle: RePEc:pra:mprapa:68425
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    File URL: https://mpra.ub.uni-muenchen.de/68425/1/MPRA_paper_68425.pdf
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    References listed on IDEAS

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    5. Stephen J. Redding, 2011. "Theories of Heterogeneous Firms and Trade," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 77-105, September.
    6. Melitz, Marc J. & Redding, Stephen J., 2014. "Heterogeneous Firms and Trade," Handbook of International Economics, Elsevier.
    7. Marc J. Melitz & Gianmarco I. P. Ottaviano, 2008. "Market Size, Trade, and Productivity," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 295-316.
    8. Fahim Al-Marhubi, 2000. "Export diversification and growth: an empirical investigation," Applied Economics Letters, Taylor & Francis Journals, vol. 7(9), pages 559-562.
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    Cited by:

    1. Carlos-Enrique, Cardoso-Vargas, 2015. "Competencia económica en el sector de transporte aéreo de pasajeros en México. Una revisión de la situación actual
      [Economic competition in air transport of passengers in Mexico. A review of the cu
      ," MPRA Paper 74294, University Library of Munich, Germany, revised 20 Dec 2015.

    More about this item

    Keywords

    Productivity; international trade; heterogeneous firms;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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