Internationalization choices: an ordered probit analysis at industry-level

Filomena Pietrovito, Alberto Pozzolo and Luca Salvatici ()

Economics & Statistics Discussion Papers from University of Molise, Department of Economics

Abstract: Trade theory traces back different patterns of internationalization to heterogeneity between firms, measured both through differences in productivity levels and size. In this paper we analyze the link between heterogeneity within sectors and internationalization choices, namely trade and foreign direct investments (FDI) for a large sample of countries and industries between 1994 and 2004. The focus of our paper is on the role played by average productivity level and the distribution of firms by size in explaining differences across sectors and countries in the extensive margin of internationalization (i.e., the number of foreign nations where firms from a given sector and country have expanded abroad). By performing an ordered probit analysis, and controlling for other factors affecting the patterns of internationalization, we confirm that industries with higher productivity levels and with a distribution of firms shifted toward large firms are more prone to internationalize in foreign markets through both trade and FDI. Moreover, the relative impact of average productivity and firm size on FDI is larger than that on trade. These results are robust to different measures of productivity and the distribution of firms.

Keywords: exports; foreign direct investments; mergers and acquisitions; productivity; distribution of firms; ordered probit (search for similar items in EconPapers)
JEL-codes: D24 F10 F14 F20 F23 (search for similar items in EconPapers)
Date: 2013-01-25
New Economics Papers: this item is included in nep-cse, nep-eff and nep-int
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Internationalization choices: an ordered probit analysis at industry level (2016)
Working Paper: Internationalization choices: an ordered probit analysis at industry-level (2013)
Working Paper: Internationalization choices: an ordered probit analysis at industry-level (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:mol:ecsdps:esdp13071

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