Access to credit and comparative advantage
Peter Egger and
Christian Keuschnigg
Canadian Journal of Economics, 2017, vol. 50, issue 2, 481-505
Abstract:
Access to external funds is crucial for the entry and expansion of entrepreneurial firms and the sectors they predominantly arise in. This paper reports three important results. First, comparative advantage is shaped by factor endowments as well as fundamental determinants of corporate finance. In particular, a larger equity ratio of firms and tough governance standards relax financing constraints, lead to entry of firms at the lower bound of the productivity distribution and create an endogenous comparative advantage in sectors where entrepreneurial firms are clustered. Second, a small degree of protection in the constrained sector can raise a country's welfare by relaxing financing constraints if terms-of-trade effects are small. Third, a small degree of protection of the financially dependent industry in a financially underdeveloped country might even raise world welfare.
JEL-codes: F11 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (9)
Downloads: (external link)
https://doi.org/10.1111/caje.12266 (text/html)
access restricted to subscribers
Related works:
Journal Article: Access to credit and comparative advantage (2017) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:cje:issued:v:50:y:2017:i:2:p:481-505
Ordering information: This journal article can be ordered from
https://www.economic ... ionen/membership.php
Access Statistics for this article
Canadian Journal of Economics is currently edited by Zhiqi Chen
More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().