Trade and Growth with Heterogeneous Firms

Richard Baldwin and Frederic Robert-Nicoud

No 4965, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper explores the impact of trade on growth when firms are heterogeneous. Our findings can be viewed as relevant to the trade and growth literature on one hand and the heterogeneous-firms trade theory on the other. Our main finding ? that freer trade is both anti-growth and welfare worsening from a purely dynamic perspective ? contrasts with most findings in the endogenous growth literature. We also show that market-entry costs are anti-growth, but heterogeneity per se is pro-growth. As concerns the heterogeneous-firms literature our main finding is a static-vs.-dynamic trade-off in terms of productivity gains. Freer trade raises measured productivity in a level sense but slows measured productivity growth.

Keywords: Trade and endogenous growth; Heterogeneous firms; Dynamic versus static efficiency (search for similar items in EconPapers)
JEL-codes: H32 P16 (search for similar items in EconPapers)
Date: 2005-03
New Economics Papers: this item is included in nep-int and nep-pbe
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Citations: View citations in EconPapers (30)

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Related works:
Journal Article: Trade and growth with heterogeneous firms (2008)
Working Paper: Trade and Growth with Heterogeneous Firms (2006)
Working Paper: Trade and Growth with Heterogenous Firms (2006)
Working Paper: Trade and growth with heterogeneous firms (2006)
Working Paper: Trade and Growth with Heterogenous Firms (2006)
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