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Learning how to export

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  • Segerstrom, Paul S.
  • Stepanok, Ignat

Abstract

In this paper, we present a standard quality ladders endogenous growth model with one significant new assumption, that it takes time for firms to learn how to export. We show that this model without Melitz-type assumptions can account for all the evidence that the Melitz (2003) model was designed to explain plus much evidence that the Melitz model can not account for. In particular, consistent with the empirical evidence we find that trade liberalization leads to a higher exit rate of firms, that exporters charge higher prices for their products as well as higher markups, and that many large firms do not export. We also find that trade iberalization promotes economic growth and that it has the opposite effect of retarding economic growth in a closely comparable growth model with Melitz-type assumptions.

Suggested Citation

  • Segerstrom, Paul S. & Stepanok, Ignat, 2012. "Learning how to export," Kiel Working Papers 1801, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:1801
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    References listed on IDEAS

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    2. Baldwin, Richard E. & Robert-Nicoud, Frederic, 2008. "Trade and growth with heterogeneous firms," Journal of International Economics, Elsevier, vol. 74(1), pages 21-34, January.
    3. Paul S. Segerstrom & Yoichi Sugita, 2015. "The Impact Of Trade Liberalization On Industrial Productivity," Journal of the European Economic Association, European Economic Association, vol. 13(6), pages 1167-1179, December.
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    Cited by:

    1. Wolf-Heimo Grieben & Fuat Sener, 2012. "North-South Trade, Unemployment and Growth: What’s the Role of Labor Unions?," Working Paper Series of the Department of Economics, University of Konstanz 2012-06, Department of Economics, University of Konstanz.
    2. Sam Tavassoli & Viroj Jienwatcharamongkhol, 2013. "Closing the Gap: An Empirical Evidence on Firm's Innovation, Productivity, and Export," ERSA conference papers ersa13p531, European Regional Science Association.
    3. Viroj Jienwatcharamongkhol & Sam Tavassoli, 2015. "Closing the gap: empirical evidence on firms’ innovation, productivity and exports," Chapters,in: Innovation and Entrepreneurship in the Global Economy, chapter 12, pages 281-309 Edward Elgar Publishing.

    More about this item

    Keywords

    trade liberalization; heterogeneous firms; quality ladders; endogenous growth;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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