Trade Complexity and Productivity

Carlo Altomonte () and Gábor Békés
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Carlo Altomonte: Department of Institutional Analysis and Public Management University Bocconi

No 914, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: We exploit a panel dataset of Hungarian firms merged with product-level trade data for the period 1992-2003 to investigate the relation between firms' trading activities (importing, exporting or both) and productivity. We find important self-selection effects of the most productive firms induced by the existence of heterogeneous sunk costs of trade, for both importers and exporters. We relate these sunk costs of trade to the relationship-specific nature of the trade activities, entailing a certain degree of technological and organizational complexity as measured by a number of proxies. We also show that, to the extent that imports and exports are correlated within firms, failing to control for the importing activity leads to overstated average productivity premia of exporters.

Keywords: trade openness; firms' heterogeneity; productivity (search for similar items in EconPapers)
JEL-codes: F12 F14 L25 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2009-07
New Economics Papers: this item is included in nep-eff and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Related works:
Working Paper: Trade Complexity and Productivity (2010)
Working Paper: Trade Complexity and Productivity (2009)
Working Paper: Trade Complexity and Productivity (2009)
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