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Author:
Publisher:
ISBN:
Category : Industrial productivity
Languages : en
Pages : 228
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Book Description
This dissertation's three essays investigate trade and productivity effects on firm behavior based on new heterogeneous-firms trade models in the case of Korea. In the first essay, firms' decision to export in the case of Korean manufacturing industries is examined, where the change in firms' productivity before and after exports are analyzed. In particular, two common hypotheses of export decision - self-selection and learning-by-exporting- are tested using a dynamic model of firm export behavior and a Korean firm-level panel database. Evidence of self-selection is found in only three out of eight industries, but that of learning-by-exporting is limited. Sunk-cost or previous-export-experience effect on the predicted export probability is relatively larger than that of firms' productivity and size. The second essay investigates the effect of trade cost changes on firms' entry and exit in Korean manufacturing. Empirical support is found for new trade theories' predictions on firm entry and exit, and the number of exporting firms, and changes in market share following trade-cost changes. However, Korean manufacturing appears to differ from some of the outcomes of the heterogeneous-firms theory, especially in the result that large firms are less likely to be a new exporter. Rather, smaller and less capital-intensive firms tended to enter the export market. In general, the results of this essay show that changing trade costs had important consequences for the structure of manufacturing activity in Korea. In the final essay, the differences in the scale economies of exporters and non-exporters in Korean manufacturing are investigated. Results from estimating a production function show that exporters face diseconomies of scale in four of five industries. A matching technique confirms the difference in returns to scale between exporters and non-exporters. The evidence that size and hence, scale economies may be less important for trade participation and gains from overseas market, bodes well for small or medium exporters. In summary, this dissertation has improved the understanding of the relationships among trade, productivity and firm behavior. The key determinant of firms' export behavior in the Korean context appears to be previous experience in overseas markets. Not surprisingly, the Korean government has invested heavily in lowering their firms' cost of accessing foreign markets. In industries where Korea has a comparative advantage, high productivity of firms appears to promote trade participation. However, productivity growth in other industries is low and falling, in some cases. A balanced approach to investments in productivity and export promotion would sustain and improve Korean manufacturing's competitiveness in global markets.
Author:
Publisher:
ISBN:
Category : Industrial productivity
Languages : en
Pages : 228
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Book Description
This dissertation's three essays investigate trade and productivity effects on firm behavior based on new heterogeneous-firms trade models in the case of Korea. In the first essay, firms' decision to export in the case of Korean manufacturing industries is examined, where the change in firms' productivity before and after exports are analyzed. In particular, two common hypotheses of export decision - self-selection and learning-by-exporting- are tested using a dynamic model of firm export behavior and a Korean firm-level panel database. Evidence of self-selection is found in only three out of eight industries, but that of learning-by-exporting is limited. Sunk-cost or previous-export-experience effect on the predicted export probability is relatively larger than that of firms' productivity and size. The second essay investigates the effect of trade cost changes on firms' entry and exit in Korean manufacturing. Empirical support is found for new trade theories' predictions on firm entry and exit, and the number of exporting firms, and changes in market share following trade-cost changes. However, Korean manufacturing appears to differ from some of the outcomes of the heterogeneous-firms theory, especially in the result that large firms are less likely to be a new exporter. Rather, smaller and less capital-intensive firms tended to enter the export market. In general, the results of this essay show that changing trade costs had important consequences for the structure of manufacturing activity in Korea. In the final essay, the differences in the scale economies of exporters and non-exporters in Korean manufacturing are investigated. Results from estimating a production function show that exporters face diseconomies of scale in four of five industries. A matching technique confirms the difference in returns to scale between exporters and non-exporters. The evidence that size and hence, scale economies may be less important for trade participation and gains from overseas market, bodes well for small or medium exporters. In summary, this dissertation has improved the understanding of the relationships among trade, productivity and firm behavior. The key determinant of firms' export behavior in the Korean context appears to be previous experience in overseas markets. Not surprisingly, the Korean government has invested heavily in lowering their firms' cost of accessing foreign markets. In industries where Korea has a comparative advantage, high productivity of firms appears to promote trade participation. However, productivity growth in other industries is low and falling, in some cases. A balanced approach to investments in productivity and export promotion would sustain and improve Korean manufacturing's competitiveness in global markets.
Author: Anson Benjamin Soderbery
Publisher:
ISBN: 9781124908502
Category :
Languages : en
Pages :
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Book Description
This dissertation discusses the role firms behavior takes in shaping our understanding of international trade. It discusses the impact on well held theoretical and empirical results from international trade when accounting for commonalities in firm behavior that distort the economy. Chapter 1 develops a model of international trade where firms are heterogeneous across two dimensions: capacity and productivity. Capacity constraints rationalize empirical results that are anomalous to new trade theory. When capacity is relatively abundant, the model predicts stronger competition (selection) in larger markets. Con- versely, when capacity is relatively "tight" constrained firms weaken competition and boost the average price level in larger markets - similar to tacit collusion. Under inter- national trade, constrained firms choose to sell a greater fraction of their production in the largest accessible market. Capacity constraints can thus magnify (dampen) domestic price and competition distortions when foreign markets are relatively large (small). Chapter 2 addresses biases in estimates of the impact of product variety on prices and welfare when market structure is inaccurately defined. We employ a market- based data set on the U.S. automobile market that allows us to define goods varieties at a more precise level, as well as discern location of production and ownership of varieties. Our estimates of price and welfare changes from new varieties in the U.S. automobile sector are twice as large as standard estimates when using our detailed market-based data. We also show that new varieties introduced by foreign-owned affiliates provided an additional 70% welfare gain during our sample. Chapter 3 notes that estimates of consumer gains from imported products rely on Feenstra (1994)'s method to estimate elasticities of substitution. Through a Monte Carlo experiment, simulated estimates suggest substantial biases due to weak instruments. However, the derivation of the elasticity of substitution drastically mitigates these biases.
Author: Marc J. Melitz
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 60
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This paper builds a dynamic industry model with heterogeneous firms that explains why international trade induces reallocations of resources among firms in an industry. The paper shows how the exposure to trade will induce only the more productive firms to enter the export market (while some less productive firms continue to produce only for the domestic market) and will simultaneously force the least productive firms to exit. It then shows how further increases in the industry's exposure to trade lead to additional inter-firm reallocations towards more productive firms. These phenomena have been empirically documented but can not be explained by current general equilibrium trade models, because they rely on a representative firm framework. The paper also shows how the aggregate industry productivity growth generated by the reallocations contributes to a welfare gain, thus highlighting a benefit from trade that has not been examined theoretically before. The paper adapts Hopenhayn's (1992a) dynamic industry model to monopolistic competition in a general equilibrium setting. In so doing, the paper provides an extension of Krugman's (1980) trade model that incorporates firm level productivity differences. Firms with different productivity levels coexist in an industry because each firm faces initial uncertainty concerning its productivity before making an irreversible investment to enter the industry. Entry into the export market is also costly, but the firm's decision to export occurs after it gains knowledge of its productivity.
Author: Thomas John Prusa
Publisher:
ISBN:
Category :
Languages : en
Pages : 332
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Author: Ann E. Harrison
Publisher: World Bank Publications
ISBN:
Category : Competition, Imperfect
Languages : en
Pages : 46
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Author: Jangho Choi
Publisher:
ISBN:
Category : Exports
Languages : en
Pages : 80
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The objective of this dissertation is to examine multi-product firms' productivity and export behavior. More specifically, this dissertation estimates productivity of firms that produce and sell multiple products, and the role of productivity in such firms' export behavior. In doing so, this dissertation develops a firm-level gravity approach to test whether multi-product firms self select to export or learn from exporting. In the first of part of this dissertation, I examine whether intra-firm resource reallocation of a multi-product firm affects its Total Factor Productivity (TFP). By extending earlier approaches, I estimate unbiased and consistent TFP of multi-product firms using a revenue-based production function. I find that TFP is more likely to be overestimated when multi-product firms' internalized demand linkage is not taken into account. I also find that multi-product firms' TFP decreases as it expands the number of products produced, but specialization of production does not play a role in TFP. In the second part, I present a theoretical framework to derive a firm-level gravity equation. By equating the total demand and total production of multi-product firms, I derive a firm-level gravity equation where export flows from firms to consumers is proportional to the product of economic size of firms, consuming power of a representative consumer, and trade resistance between origin and destination. Using the firm-level gravity equation, I test the hypothesis that high productivity firms self select to export and that the size of export flows is determined by productivity. I find that the economic size of exporting firms and the consuming power of a representative consumer have a positive and statistically significant effect on exports, while trade resistance such as tariff and distance have the opposite effect. I also find that the estimated coefficients of the firm-level gravity equation tend to be smaller than those of the traditional country-level gravity equation. In the final part of the dissertation, I test whether or not previous export experience improves the productivity of firms. Again, the estimable equation is derived from the equilibrium condition presented in the second part. My result confirms that previous export experience indeed improves productivity of exporting firms, but tariffs have the opposite effect. The results of this dissertation reveal the economic behavior of multi-product firms, which usually account for a large of economic activity and output in many countries. Understanding such firms' productivity and export behavior can offer strategies for economic growth and development. Empirical findings of this dissertation suggest policy options including lowering tariffs, and improving infrastructure that can lower transportation costs. Further examination of product range and specialization of production can offer strategies to source exports from small and midsize firms.
Author:
Publisher:
ISBN: 9780853282907
Category : Business cycles
Languages : en
Pages : 39
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This paper presents a model with monopolistic competition, productively heterogeneous firms, and business cycle aggregate shocks. With firm-specific productive heterogeneity, weaker firms quit when faced with a negative aggregate shock. Consequently, trade does not always increase firm-level aggregate productivity as negative shocks on the home market can be compensated for by positive shocks elsewhere. Weaker firms, which would otherwise quit in autarky, can continue to operate by exporting. Despite this, trade can still improve welfare for risk-averse consumers by reducing aggregate price fluctuations.
Author: Adam B. Jaffe
Publisher:
ISBN:
Category : Diffusion of innovations
Languages : en
Pages :
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Author: Qian Wu
Publisher:
ISBN:
Category : Industrial productivity
Languages : en
Pages : 141
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Firms' participation in exporting or foreign direct investment is an extremely rare behavior: only 4 percent of over 5.5 million U.S. firms were exporters in 2000. Exporters are generally larger (e.g. output and employment) and more productive than firms serving only domestic markets. Such heterogeneity within a narrowly defined industry cannot be fully explained by either comparative advantage arguments or the presence of scale economies and consumers' love of variety. Recent studies of heterogeneous firms show that a reduction in trade costs, i.e. policy, geographic and institutional barriers, has two effects within an industry previously not recognized in trade literature: (i) exit of low productivity firms, and (ii) resource reallocation in favor of high productivity firms. These two effects combine to raise an industry's average productivity and overall welfare, but can adversely affect some regions of an economy with firm closures or job losses. The objective of this dissertation is to examine the effects of trade costs on firm entry, exit, and employment at a regional level in the United States. For this purpose, industry-specific trade costs by U.S. regions are derived and their underlying sources are examined. The chosen trade-costs measure, based on the gravity equation, captures the variation over time in trade fictions among countries. Data from the Census Bureau and the World Bank are employed to quantify trade costs by U.S. industries and regions. Results show that a single measure of trade costs for the United States does not adequately represent the large number of and diverse regions through which trade in agriculture and manufacturing occurs. Moreover, geographic factors appear to be relatively more important than policy barriers in explaining the level of trade costs faced by U.S. regions. Drawing on recent heterogeneous firms models, this dissertation specifies an empirical framework to examine: (i) firm entry or exit arising from changes in trade costs, i.e. extensive margin, and (ii) changes in employment of surviving firms creation arising from changes in trade costs, i.e. intensive margin. These two hypotheses are tested using regional business dynamics data from the Census Bureau and trade cost measures derived earlier. Results show that trade cost changes affect firm exit and employment as hypothesized. That is, lowering trade costs increases the likelihood of firm exit, presumably of the low-productivity ones. Thus, trade costs, by way of the extensive margin, affect an industry's average productivity. Similarly, trade costs appear to affect the employment of surviving firms suggesting that the intensive margin also operates to improve average productivity of an industry, such as through resource reallocation towards high-productivity firms. The intra-industry reallocation of resources to high productivity firms is an important source of gains from trade to the whole economy. Nonetheless, some regions face firm exit and job losses. In assessing the gains from trade, attention must be paid to the distributional consequences of resource reallocation within an industry as well as a country.
Author: Ngo Van Long
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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