Essays on Firm Heterogeneity in Trade

Yuriy O Bots, Purdue University

Abstract

In the first chapter of this dissertation I use a heterogeneous firm framework to relate product differentiation to export success. I use the Rauch (1999) classification of goods, Broda and Weinstein (2006) elasticity estimates, and the elasticity of substitution estimated from 4-digit ISIC trade data to proxy for product differentiation. Using Colombian plant-level data I show that differentiated industries have a higher share of exporters and consequently a firm that produces differentiated goods is more likely to export. Identification comes from cross-industry variation in product differentiation. In the second chapter I explore cross-country differences in the exporter productivity premium. The difference between exporters and non-exporters has been widely documented in the trade literature. The empirical studies paint a consistent picture: exporters are more productive. I use World Bank Enterprise Survey data to document cross-country patterns of productivity differences between exporting and non-exporting establishments. For many countries an exporter premium exists. Nevertheless, in multiple cases exporters are not significantly different and, more surprisingly, in some cases underperform relative to their domestic counterparts. The differences in the development, openness of the economy, infrastructure and governance are shown to be correlated with the exporter productivity premium indicating that the strength of the self-selection mechanism might be dependent on country-level variables.

Degree

Ph.D.

Advisors

Xiang, Purdue University.

Subject Area

Economics

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