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Total factor productivity and the decision to serve foreign markets: Firm level evidence from France

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  • Irac, D.

Abstract

This paper examines productivity differences between firms doing foreign direct investment (FDI) and domestic firms on a sample of 28,133 continuing French firms over the period 1996-2002. The main contribution of this paper is to scrutinize the links between the different modes of globalization (exporting vs. setting up an affiliate overseas) and address the question of causality between productivity and global expansion. Comparing domestic firms and extra-firm exporters of goods, we find that pre-entry selection is more important than post-market-entry effects. Pre-entry boosts to productiVity are interpreted as a reflection of sunk cost to exporting in our framework while the absence of post-entry productivity effects is interpreted as an absence of learning effects associated with exporting. This result does not seem to fully hold for exports of services, which we consider as a partial evidence of foreign knowledge spillovers at work in the exports of services; more in-depth investigation would be probably fruitful to identify the dynamics of the diffusion process.

Suggested Citation

  • Irac, D., 2008. "Total factor productivity and the decision to serve foreign markets: Firm level evidence from France," Working papers 205, Banque de France.
    • Handle: RePEc:bfr:banfra:205
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    References listed on IDEAS

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    Cited by:

    1. Guillaume Gaulier & Emmanuel Milet & Daniel Mirza, 2010. "Les firmes françaises dans le commerce international de services," Économie et Statistique, Programme National Persée, vol. 435(1), pages 125-147.
    2. Philippe Askenazy & Aida Caldera & Guillaume Gaulier & Delphine Irac, 2015. "Financial constraints and foreign market entries or exits: firm-level evidence from France," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(2), pages 231-253, May.

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    More about this item

    Keywords

    International Trade ; productivity ; Learning ; Spillover ; Self-selection.;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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