Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/74889
Authors: 
Damijan, Jože P.
Polanec, Sašo
Prašnikar, Janez
Year of Publication: 
2004
Series/Report no.: 
LICOS Discussion Paper 148
Abstract: 
This paper adds a new dimension to the recent literature on relationship beween firm's heterogeneity in tfirms of productivity and its decision to exports and/or invest in foreign affiliate, namely the heterogeneity of foreign markets. Exploiting a rich and complete dataset for Slovenian exporting firms in the period 1994 - 2002, we gain several interesting insights. First, we demonstrate the importance of fixed entry costs in foreign markets causing that the number of foreign markets served by individual firm increases with firm's productivity level. We show that firms enter additional export markets only gradually - on average one market in two years. Second, we demonstrate that, on average, exporting firms are not always more productive than firms supplying only domestic market. Also, we confirm a conjecture that higher productivity level is required for firms starting to export to advanced countries as opposed to starting to export to developing countries. Finally, we observe that firms can gain significant productivity improvements when serving foreign markets. Significant productivity improvements occur only when serving advanced, high-wage foreign markets. In a small open country, exporting per se does not warranty such effects.
Subjects: 
Exports
Productivity
Firm Heterogeneity
Export Market Heterogeneity
JEL: 
D24
F14
Document Type: 
Working Paper

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