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Self-selection along different export and import markets

  • Francesco Serti
  • Chiara Tomasi

How are firms' performances influenced by the specific characteristics of markets where exports are directed and imports originate from? Using a rich database on Italian manufacturing firms, this essay adds new evidence on the relationship between trade status and firm characteristics. First, exploiting firm-level information on the destination of export and the origin of imports, we observe the heterogeneity among firms trading with different type of markets. We show that different destinations of exports and different origins of imports map into distinctive firm characteristics. Second, we test the hypothesis that the self-selection mechanisms occur market to market. We observe that firms exporting to and importing from high income countries face higher sunk costs than those trading with less developed markets. Third, we investigate the underlying sources of these ex-ante differences by looking at how countries' characteristics such as population, exchange rate, productivity and distance may impact on firms' performances.

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Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2009/18.

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Date of creation: 10 Dec 2009
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Handle: RePEc:ssa:lemwps:2009/18
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