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Ricardian trade and the impact of domestic competition on export performance

Author

Listed:
  • Matilde Bombardini
  • Christopher J. Kurz
  • Peter M. Morrow

Abstract

This paper develops and empirically examines a model of relative productivity differences both within and across industries for small open economies. We decompose the effect of industry productivity on export performance into direct effect of own‐firm productivity and an indirect effect of higher peer‐firm productivity. In a sample of Chilean and Colombian plants, we find evidence of both a positive direct effect and a negative indirect effect. The empirical evidence supports our theoretical prediction that industry‐specific factors of production and asymmetric substitutability between domestic and foreign varieties drive the negative indirect effect. JEL classification: F10, F11, F12 Ce mémoire développe et examine empiriquement un modèle des différences de productivités relatives, á la fois á l’intérieur et entre les industries, pour des petites économies ouvertes. On décompose l’effet de la productivité industrielle sur la performance du secteur des exportations en un effet direct de la productivité de la firme particuliére, et un effet indirect de la productivité des autres firmes dans l’industrie. Dans un échantillon d’établissements au Chili et en Colombie, on découvre á la fois un effet direct positif et un effet indirect négatif. Le travail empirique supporte les prédictions théoriques á savoir que les facteurs de production spécifiques á l’industrie et la substituabilité asymétrique entre les variétés domestiques et étrangéres de produits sont au fondement de cet effet indirect.

Suggested Citation

  • Matilde Bombardini & Christopher J. Kurz & Peter M. Morrow, 2012. "Ricardian trade and the impact of domestic competition on export performance," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(2), pages 585-612, May.
  • Handle: RePEc:wly:canjec:v:45:y:2012:i:2:p:585-612
    DOI: 10.1111/j.1540-5982.2012.01715.x
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    2. Haichao Fan & Edwin L.-C. Lai & Han Steffan Qi, 2016. "Imported-input Trade Liberalization and Firms' Export Performance in China: Theory and Evidence," CESifo Working Paper Series 5828, CESifo.
    3. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," The World Bank Economic Review, World Bank, vol. 32(1), pages 163-182.
    4. Ulf Lewrick & Lukas Mohler & Rolf Weder, 2014. "When firms and industries matter: understanding the sources of productivity growth," BIS Working Papers 469, Bank for International Settlements.
    5. Senol Babuşçu & Adalet Hazar & M. Nihat Solakoglu & Cengiz Tunc, 2019. "Sector-Level Competition and Export: Evidence from Exporter Dynamics Database," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 1-18, October.
    6. Fábio Batista & José Eduardo Matos & Miguel Costa Matos, 2017. "Assessing the Competitiveness of the Portuguese Footwear Sector," GEE Papers 0066, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Feb 2017.

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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