Trade Complexity and Productivity

Carlo Altomonte () and Gábor Békés

No 16, KITeS Working Papers from KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy

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. 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: 34 pages
Date: 2009-07, Revised 2009-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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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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