Do firms become more efficient after becoming exporters? Do exporters generate positive externalities for domestically oriented producers? In this paper we tackle these questions by analyzing the causal links between exporting and productivity using plant-level data. We look for evidence that firms ’ cost processes change after they break into foreign markets. We find that relatively efficient firms become exporters; however, in most industries, firms ’ costs are not affected by previous exporting activities. So the well-documented positive association between exporting and efficiency is explained by the self-selection of the more efficient firms into the export market. We also find some evidence of positive regional externalities. I.

This paper reviews research that uses longitudinal microdata to document productivity movements and to examine factors behind productivity growth. The research explores the dispersion of productivity across firms and establishments, the persistence of productivity differentials, the consequences of entry and exit, and the contribution of resource reallocation across firms to aggregate productivity growth. The research also reveals important factors correlated with productivity growth, such as managerial ability, technology use, human capital, and regulation. The more advanced literature in the field has begun to address the more difficult questions of the causality between these factors and productivity growth.

Over the last three decades Taiwan and South Korea have seen high sustained rates of growth in output and income. While high savings rates and substantial investments in new capital equipment are clearly an important part of their success, it is impossible to ignore the role of the export market as a contributing factor. At a minimum the ability to export has allowed manufactures to specialize in a range

We look beneath bilateral trade data by examining the exports and imports of in French manufacturing firms. One striking finding is that variation in trade dividual across sources and destinations is much more the consequence of variation volumes the number of firms participating than in how much each one buys or sells. At the in time, the variation in trade volumes across firms is much more the consequence same variation in amounts sold to or bought from a given number of trading partners of of firms account for most trade. If they trade at all most firms export to or fraction from only one country, but most trade is accounted for by firms that export import

New developments in the world economy have triggered research designed to better understand the changes in trade and investment patterns, and the reorganization of production across national borders. Although traditional trade theory has much to offer in explaining parts of this puzzle, other parts required new approaches. Particularly acute has been the need to model alternative forms of involvement of business firms in foreign activities because organizational change has been central in the transformation of the world economy. This paper reviews the literature that has emerged from these efforts. The theoretical refinements have focused on the individ-ual firm, studying its choices in response to its own characteristics, the nature of the industry in which it operates, and the opportunities afforded by foreign trade and investment. Important among these choices are organizational features, such as sourcing strategies. But the theory has gone beyond the individual firm, studying the implications of firm behavior for the structure of industries. It provides new explana-tions for trade structure and patterns of foreign direct investment, both within and across industries, and has identified new sources of comparative advantage.

Many governments offer significant inducements to attract inward investment, motivated by the expectation of spillover benefits. This paper begins by reviewing possible sources of spillovers. It then provides a comprehensive evaluation of the empirical evidence on productivity, wages and exports spillovers in developing, developed and transitional economies. Although theory can identify a range of possible spillover channels, robust empirical support for positive spillovers is hard to find. The reasons for this are explored and the paper concludes with a review of policy aspects.

This paper studies the impact of a regional free trade agreement, MERCOSUR, on technology upgrading by Argentinean firms. To guide empirical work, I introduce technology choice in Melitz’s (2003) model of trade with heterogeneous firms. The joint treatment of the technology adoption and exporting choices shows that the increase in revenues produced by trade integration can induce exporters to upgrade technology. An empirical test of the model reveals that firms in industries facing higher reductions in Brazil’s import tariffs increase their investment in technology faster and exporters upgrade technology faster than other firms in the same industry. This paper is a revised version of the second chapter of my Ph.D. dissertation at Harvard University. I would like to thank my advisors Philippe Aghion, Pol Antras, Elhanan Helpman and Marc Melitz for their guidance and support. For helpful suggestions and comments, I also wish to thank Ivan Fernandez-Val, Manuel

for any errors.

This paper explores Colombian trade policy during 1977-1991, a period of substantial variation in protection across industries, to examine whether increased exposure to foreign competition generates plant-level productivity gains. Using a large panel of manufacturing plants, we find a strong positive impact of tariff liberalization on consistent productivity estimates, controlling for plant and industry heterogeneity. This result is not driven by the endogeneity of protection nor by plant exit. The impact of tariff liberalization on productivity is stronger for large plants and for plants in less competitive industries. Qualitatively similar results are obtained when using effective rates of protection and import penetration ratios as measures of protection.

Despite the fact that importing and exporting are extremely rare firm activities, economists generally devote little attention to the role of firms when discussing international trade. This paper summarizes key differences between trading and non-trading firms, demonstrates how these differences present a challenge to standard trade models and shows how recent “heterogeneous-firm” models of international trade address these challenges. We then make use of transaction-level U.S. trade data to introduce a number of new stylized facts about firms and trade. These facts reveal that the extensive margins of trade – that is, the number of products firms trade as well as the number of countries with which they trade – are central to understanding the well-known role of distance in dampening aggregate trade flows.