Export Growth and Factor Market Competition: Theory and Some Evidence

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

No 11-013/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Empirical evidence suggests that sectoral export growth decreases exporters' survival probability, whereas this is not true for non-exporters. Models with firm heterogeneity in total factor productivity (TFP) predict the opposite. To solve this puzzle, we develop a two{factor framework where firms differ in factor intensities. Thus, export growth increases competition for the factor used intensively by exporters, eliminating some of them, while non-exportersbenefit. Interacting heterogeneity in factor shares with heterogeneity in TFP we show that factor market competition reduces the growth in average TFP brought about by trade liberalization.

Keywords: Firm dynamics; two-factor trade model; firm heterogeneity in factor input ratios (search for similar items in EconPapers)
JEL-codes: F12 F14 F16 L11 (search for similar items in EconPapers)
Date: 2011-01-20
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20110013

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