Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/238476 
Authors: 
Year of Publication: 
2020
Series/Report no.: 
ADBI Working Paper Series No. 1119
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
This paper examines the trade participation of Bangladesh's manufacturing firms using a three-year panel. It distinguishes between extensive and intensive margin effects using a Heckman sample selection model. Particular attention is paid to the role of imported intermediates and inward foreign direct investment (FDI) in promoting export development. While there is a strong association between export performance and firm size, these two indicators have a positive impact on trade participation at the intensive margin for firms of all sizes, and importing intermediates also have a positive impact on trade participation at the extensive margin. An analysis of marginal effects from the model shows that small firms experience the smallest export boost from importing and inward FDI, although the effect is still quantitatively large. From a policy perspective, the paper highlights the importance of international openness and global value chain linkages as drivers of export success, including for smaller firms. It also stresses the possible alternative ways through which small and medium-sized enterprises (SMEs) may participate in the international economy, such as by exporting indirectly. Reconciling legitimate policy interest in SME trade with the universal empirical finding that larger firms participate to a greater degree in the trading economy should be an important objective of future research.
Subjects: 
trade policy
foreign direct investment
manufacturing
Bangladesh
small and medium-sized enterprises
sample selection model
JEL: 
F13
F15
O24
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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