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Trade Complexity and Productivity

Author

Listed:
  • Carlo Altomonte

    (IAM - Bocconi University, KITeS and FEEM, Milan)

  • Gabor Békés

    (Institute of Economics, Hungarian Academy of Science. Corresponding author: IE-HAS, 1112 Budaorsi ut 45, Budapest, Hungary.)

Abstract
We exploit a panel dataset of Hungarian firms merged with product-level trade data for the period 1992-2003 to investigate the relation between firms' trading activities (importing, exporting or both) and productivity. We find important self-selection effects of the most productive firms induced by the existence of heterogeneous sunk costs of trade, for both importers and exporters. We relate these sunk costs of trade to the relationship-specific nature of the trade activities, entailing a certain degree of technological and organizational complexity. We also show that, to the extent that imports and exports are correlated within firms, failing to control for the importing activity leads to overstated average productivity premia of exporters.

Suggested Citation

  • Carlo Altomonte & Gabor Békés, 2009. "Trade Complexity and Productivity," KITeS Working Papers 016, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2009.
    • Handle: RePEc:cri:cespri:kites16_wp
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    trade openness; firms' heterogeneity; productivity;
    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
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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