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Florian Mayneris, CORE, UCL Print
Monday, 15 November 2010, 12:00 - 13:30

Entry on export markets, credit constraints and firm-level productivity growth

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Florian  Mayneris, CORE, Université Catholique de Louvain

Abstract: Some recent findings show that, after a trade liberalization episode, initially more productive new exporters experience larger productivity gains than less productive ones in some countries, while it is the exact opposite in some others. We build a model that could reconcile both results: when profit function is concave with respect to productivity, less productive firms invest more and grow more than the others when deciding to enter on export markets. However, if credit constraints are disproportionately binding for small firms, initially less productive firms could be impeded to invest. We test theoretical predictions of the model on French firm-level data, exploiting differences between sectors in terms of relative intensity of credit constraints for small firms. In line with the model, entry on export market is associated with higher investment and higher performance growth for initially small firms in sectors where small firms are not disproportionately credit constrained. Such a pattern is not observed for sectors in which small firms are disproportionately credit-constrained.

Location: S 12.227
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