Export-Intensity and Productivity Growth: Evidence from German Firm-Level Data

The controversy about the relation between trade and economic growth that roots deeply in questions of efficient allocation, specialisation and knowledge flows is presumably one of the oldest issues in the economics discipline and during the centuries almost every outstanding and all common economists have expressed their opinion on the topic. The trade and growth nexus was, is and will be of utmost relevance as it concerns both developed countries as well as developing countries, and as people around the world are directly affected by the influences of trade policy on individual income and on income distribution. In Chaps. 2 and 3 it is elaborated that most of this discussion is concerned with the short- and medium-run effects and that only with the emergence of New Growth Theory a persuasive intellectual support for possible long-run growth implications was delivered. In recent years economic theory has enhanced these approaches by accounting for firm-heterogeneity and strategic interaction between firms. While with these improvements the actual channels and mechanisms of how trade (liberalisation) may influence economic growth and technological change are better understood, the main conclusion that can be drawn is that there are long-run growth and welfare effects of trade, but the sign of these effects is ambiguous. It depends for example on the technology gap between leader and follower country, on an individual firm’s distance to the industry frontier, on the share of frontier firms within an industry or on the share of frontier industries within a country. It might as well depend on the degree of prevailing product market competition before liberalisation or it depends on the degree of possible inter-temporal and international knowledge spillovers. In sum, the ball is once again passed to the empirical study of actual growth experiences in face of trade liberalisation.