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Export Growth and Factor Market Competition: Theory and Evidence

Author

Listed:
  • Julian Emami Namini

    (Erasmus University Rotterdam)

  • Giovanni Facchini

    (Erasmus University Rotterdam)

  • Ricardo Lopez

    (International Business School, Brandeis University)

Abstract

Empirical evidence suggests that sectoral export growth decreases exporters' survival probability, whereas non-exporters are unaffected. Models with firm heterogeneity in total factor productivity predict the opposite. To solve this puzzle, we develop a two-factor framework where firms differ in factor shares. In this model, export growth increases competition for the factor used intensively by exporters, eliminating some of them, while non-exporters benefit. Our empirical analysis shows that the forces highlighted in the model drive the firm selection experienced by the Chilean manufacturing sector, suggesting that heterogeneity in factor shares is crucial to understand how firms react to trade liberalization.

Suggested Citation

  • Julian Emami Namini & Giovanni Facchini & Ricardo Lopez, 2011. "Export Growth and Factor Market Competition: Theory and Evidence," Working Papers 28, Brandeis University, Department of Economics and International Business School.
    • Handle: RePEc:brd:wpaper:28
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    References listed on IDEAS

    as
    1. Roberto Alvarez & Ricardo A. López, 2005. "Exporting and performance: evidence from Chilean plants," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(4), pages 1384-1400, November.
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    14. Marco Leonardi, 2007. "Firm heterogeneity in capital-labour ratios and wage inequality," Economic Journal, Royal Economic Society, vol. 117(518), pages 375-398, March.
    15. Lopez, Ricardo A., 2006. "Imports of intermediate inputs and plant survival," Economics Letters, Elsevier, vol. 92(1), pages 58-62, July.
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    20. repec:cdl:indrel:124333 is not listed on IDEAS
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Julian Emami Namini & Ricardo A. López, 2013. "Factor price overshooting with trade liberalization: theory and evidence," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(2), pages 139-181, May.
    2. Leila Baghdadi & Sonia Ben Kheder & Hassen Arouri, 2017. "In Search of A New Development Model For Tunisia: Assessing the Performance of the Offshore Regime," Working Papers 1118, Economic Research Forum, revised 07 Jun 2017.
    3. Joachim Wagner, 2016. "Exports, Imports and Firm Survival: First Evidence for Manufacturing Enterprises in Germany," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 10, pages 341-367, World Scientific Publishing Co. Pte. Ltd..
    4. Emami Namini, Julian & Facchini, Giovanni & López, Ricardo A., 2013. "Export growth and firm survival," Economics Letters, Elsevier, vol. 120(3), pages 481-486.
    5. Ina Charlotte Jäkel, 2013. "Import-push or Export-pull? An Industry-level Analysis of the Impact of Trade on Firm Exit," Economics Working Papers 2013-20, Department of Economics and Business Economics, Aarhus University.
    6. Toraganlı, Nazlı & Yazgan, M. Ege, 2016. "Exchange rates and firm survival: An examination with Turkish firm-level data," Economic Systems, Elsevier, vol. 40(3), pages 433-443.
    7. Ina Jäkel, 2014. "Import-push or export-pull? An industry-level analysis of the impact of trade on firm exit," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 747-775, November.
    8. Joachim Wagner, 2016. "International Trade and Firm Performance: A Survey of Empirical Studies since 2006," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 2, pages 43-87, World Scientific Publishing Co. Pte. Ltd..

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    More about this item

    Keywords

    Firm Dynamics; Two-factor Trade Model; Firm Heterogeneity in Factor Input Shares; Chile; Manufacturing Industry;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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