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Who Dies? International Trade, Market Structure, and Industrial Restructuring

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  • Andrew B Bernard
  • J Bradford Jensen

Abstract

This paper examines the role of changing factor endowments in the growth and decline of industries and regions. The implications of an endowment-based Heckscher-Ohlin trade model for plant entry and exit are tested on 20 years of data for the entire US manufacturing sector. The trade model provides predictions for which industries will see growth through the positive net entry of plants. A multi-region version of the same model has predictions for which regions will see high turnover and net entry of plants. In a country such as the U.S. that is augmenting both its physical and human capital, the least capital-intensive, least skill-intensive industries are correctly predicted to have the lowest rate of net entry. In addition, increases in regional capital and skill intensity are associated with higher probabilities of shutdown, especially for plants in industries with low initial capital and skill intensities.

Suggested Citation

  • Andrew B Bernard & J Bradford Jensen, 2001. "Who Dies? International Trade, Market Structure, and Industrial Restructuring," Working Papers 01-04, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:01-04
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    File URL: https://www2.census.gov/ces/wp/2001/CES-WP-01-04.pdf
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    References listed on IDEAS

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    7. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-1150, September.
    8. Gordon H. Hanson & Matthew J. Slaughter, 1999. "The Rybczynski Theorem, Factor-Price Equalization, and Immigration: Evidence from U.S. States," NBER Working Papers 7074, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Arora, Punit & De, Prabal, 2020. "Environmental sustainability practices and exports: The interplay of strategy and institutions in Latin America," Journal of World Business, Elsevier, vol. 55(4).
    2. Imbs, Jean, 2002. "Why the Link Between Volatility and Growth is Both Positive and Negative," CEPR Discussion Papers 3561, C.E.P.R. Discussion Papers.
    3. Lileeva, Alla, 2008. "Dynamique de la libéralisation des échanges et de la productivité : un éclairage canadien," Série de documents de recherche sur l'analyse économique (AE) 2008051f, Statistics Canada, Direction des études analytiques.
    4. Imbs, Jean, 2007. "Growth and volatility," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 1848-1862, October.
    5. Affortunato Francesca & Ciommi Mariateresa & Furia Donatella & Vaccaro Enrico, 2010. "International Specialization And Vertical Differentiation," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 146-150, July.
    6. Borin, Alessandro & Lamieri, Marco, 2007. "Estimating Product Quality in International Trade," MPRA Paper 14678, University Library of Munich, Germany.
    7. Yoonsoo Lee, 2006. "Relocation patterns in U.S. manufacturing," Working Papers (Old Series) 0624, Federal Reserve Bank of Cleveland.
    8. Maria Bas & Ivan Ledezma, 2007. "Market Access and the Evolution of within Plant Productivity in Chile," CESifo Working Paper Series 2077, CESifo.
    9. Alla Lileeva, 2008. "Trade liberalization and productivity dynamics: evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 360-390, May.
    10. Maria Bas & Ivan Ledezma, 2008. "Trade liberalization and heterogeneous within-firm productivity improvements," PSE Working Papers halshs-00590303, HAL.
    11. Chaney, Thomas, 2016. "Liquidity constrained exporters," Journal of Economic Dynamics and Control, Elsevier, vol. 72(C), pages 141-154.
    12. Roberto Alvarez & Sebastián Vergara, 2010. "Exit in Developing Countries: Economic Reforms and Plant Heterogeneity," Economic Development and Cultural Change, University of Chicago Press, vol. 58(3), pages 537-561, April.
    13. Roberto Alvarez & Ricardo A. López, 2008. "Entry and Exit in International Markets: Evidence from Chilean Data," Review of International Economics, Wiley Blackwell, vol. 16(4), pages 692-708, September.
    14. repec:dau:papers:123456789/6916 is not listed on IDEAS
    15. Peter K. Schott, 2001. "Do Rich and Poor Countries Specialize in a Different Mix of Goods? Evidence from Product-Level US Trade Data," NBER Working Papers 8492, National Bureau of Economic Research, Inc.
    16. Baggs, Jennifer, 2004. "Changing Trade Barriers and Canadian Firms: Survival and Exit After the Canada-U.S. Free Trade Agreement," Analytical Studies Branch Research Paper Series 2004205e, Statistics Canada, Analytical Studies Branch.
    17. repec:spo:wpmain:info:hdl:2441/5g3sadr9h8gbri8hrtq0h6au2 is not listed on IDEAS
    18. repec:hal:spmain:info:hdl:2441/5g3sadr9h8gbri8hrtq0h6au2 is not listed on IDEAS

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    More about this item

    Keywords

    CES; economic; research; micro; data; microdata; chief; economist;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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