The literature on international trade and firm performance grows exponentially. This paper attempts to summarize what we learn from this literature to guide future empirical and theoretical work in this area. The focus is on the empirical part of the literature that consists of recently published papers using data for firms from manufacturing or services industries to study the links between international trade (exports and imports) and dimensions of firm performance (productivity, wages, profitability and survival).
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The recent theoretical literature on heterogeneous firms and trade is reviewed by Redding (2010).
A comprehensive survey of studies on the effects of international trade on productivity and economic growth based on macro data is provided by Singh (2010).
For a review of the literature on foreign direct investment and productivity see Hayakawa et al. (2011). For inward foreign direct investment and a survey of empirical studies on productivity differentials between foreign owned firms and domestic firms see Barba Navaretti and Venables (2004, pp. 155–162); for offshoring and productivity see Wagner (2011a).
As has recently been shown by Powell and Wagner (2011), exporter premia may also vary substantially within the productivity distribution of firms within a country. In their study for Germany they find that the exporter premium is larger at the bottom end of the productivity distribution.
Here (and in all other tables in this literature survey) important results from empirical studies are summarized qualitatively only. Any attempt to reproduce the quantitative results by stating the size of the estimated coefficients and effects would suggest a high degree of comparability across the studies. This, however, is not given due to differences in the unit of analysis (establishment vs. enterprise), the sampling frame (all firms versus firm with a number of employees above a certain threshold only), the specification of the empirical models estimated and the econometric methods applied. This point is discussed in the concluding Sect. 4 below.
Recently, a new literature started that looks at an alternative measure of the extensive margin of exports besides the number of destination markets, namely the number of products exported, and its relationship to firm performance. Muuls and Pisu (2009) find for Belgium that productivity is also increasing as the number of products exported (or imported) rises. Similarly, Silva et al. (2010c) show that Portuguese firms that export (or import) a larger number of products are more productive. These relationships are interpreted to be suggestive that fixed costs of trade are incurred for each new product a firm starts to trade internationally. Note that the direction of causality between the number of traded products and productivity is not investigated in these studies. The relation between the number of goods traded and firm performance is an important area of future research.
For a comprehensive survey of the literature on services trade with a focus on investigations of the determinants of international trade and investment in services, the potential gains from greater trade and efforts to achieve trade liberalization through agreements see Francois and Hoekman (2010).
In Table 4 only studies based on linked employer-employee panel data are included. Recent studies on the relation between trade and wages using average data at the firm level include Serti et al. (2010) for exports and imports in Italy; Tsou et al. (2006) for Taiwan; Kandilov (2009) for Chile; Brambilla et al. (2010) for Brazil; and Amiti and Davis (2008) for Indonesia.
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I thank my co-authors of contributions to this literature from the past six years—Nils Braakmann, Helmut Fryges, Sourafel Girma, Holger Görg, David Powell, Horst Raff, Thorsten Schank, Claus Schnabel, Yama Temouri, Vincenzo Verardi, Alexander Vogel and all members of the International Study Group on Exports and Productivity (ISGEP)—for many insightful discussions and a lot of ideas that made the preparation of this literature survey possible. Suggestions from Harmen Lehment, the editor, and comments from two anonymous reviewers that helped to improve the paper are gratefully acknowledged. Evidently, none of them is responsible for my summary and interpretation of the literature presented here.
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Wagner, J. International trade and firm performance: a survey of empirical studies since 2006. Rev World Econ 148, 235–267 (2012). https://doi.org/10.1007/s10290-011-0116-8
- International trade
- Firm performance
- Empirical studies