Export Growth and Factor Market Competition: Theory and Evidence

Julian Emami Namini, Giovanni Facchini and Ricardo López Rago
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Julian Emami Namini: Erasmus University of Rotterdam

No 309, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: Empirical evidence suggests that sectoral export growth decreases exporters\' survival probability, whereas non{exporters are unaffected. Models with firm heterogeneity in total factor productivity predict the opposite. To solve this puzzle, we develop a two-factor framework where firms differ in factor shares. In this model, export growth increases competition for the factor used intensively by exporters, eliminating some of them, while non-exporters benefit. Our empirical analysis shows that the forces highlighted in the model drive the firm selection experienced by the Chilean manufacturing sector, suggesting that heterogeneity in factor shares is crucial to understand how firms react to trade liberalization.

Keywords: Firm Dynamics; Two-Factor Trade Model; Firm Heterogeneity in Factor Shares; Chile; Manufacturing Industry (search for similar items in EconPapers)
JEL-codes: F12 F14 F16 L11 (search for similar items in EconPapers)
Pages: 37
Date: 2011-05-09, Revised 2011-05-09
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Export Growth and Factor Market Competition: Theory and Evidence (2011)
Working Paper: Export growth and factor market competition: theory and evidence (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:309

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