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Internationalization choices: an ordered probit analysis at industry-level

Filomena Pietrovito (), Alberto Pozzolo () and Luca Salvatici ()
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Filomena Pietrovito: University of Molise

No 349, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

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 di-rect 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 internatio-nalization (i.e., the number of foreign nations where firms from a given sector and country have ex-panded abroad). By performing an ordered probit analysis, and controlling for other factors affect-ing 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 for-eign 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 prod-uctivity and the distribution of firms.

Keywords: exports; FDI; 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)
New Economics Papers: this item is included in nep-cse, nep-dcm, nep-eff, nep-ifn and nep-int
Date: 2013-04-24, Revised 2013-04-24
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Related works:
Journal Article: Internationalization choices: an ordered probit analysis at industry level (2016) Downloads
Working Paper: Internationalization choices: an ordered probit analysis at industry-level (2013) Downloads
Working Paper: Internationalization choices: an ordered probit analysis at industry-level (2013) Downloads
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