Export Variety and Country Productivity : Estimating the Monopolistic Competition Model with Endogenous Productivity

By Robert C. Feenstra, H. Kee. 2008

311 citations recorded by the source corpus.

This paper provides evidence on the monopolistic competition model with heterogeneous firms and endogenous productivity. We show that this model has a well-defined GDP function where relative export variety enters positively, and estimate this function over 48 countries from 1980 to 2000. Average export variety to the United States increases by 3.3% per year, so it nearly doubles over these two decades. The total increase in export variety is associated with a 3.3% average productivity improvement for exporters over the two decades. Overall, the model can explain 31% of the within-country variation in productivity (or 52% for the OECD countries), but only a very small fraction of the between-country variation in productivity.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/419feb6bc57e2c12e31a3fd538fcbf37c8cf0d10

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Citations in the corpus

Domestic Value Added in Exports: Theory and Firm Evidence from China (2015, unknown): “(18) The intuition is similar to the positive effects of an increase in import varieties on aggregate productivity and welfare (e.g., Broda and Weinstein, 2006 and Feenstra and Kee, 2008).”
Monopolistic Competition and Optimum Product Diversity under Firm Heterogeneity (2019, background): “8 7While VES utility does not include the quadratic utility of Melitz and Ottaviano (2008) and the translog utility of Feenstra (2003), Zhelobodko et al. show it captures the qualitative features of market outcomes under these forms of non-additive utility. 8We consider this to be the proof of a fol”
The relationship between trade openness and economic growth: Some new insights on the openness measurement issue (2011, unknown): “So, following Feenstra and Kee (2008) we take the union of all products sold in the world market in any year over the period 1988-2014, and we average real exports sales of each product over years.”
Services Trade and Policy (2010, background): “Diversifying the export bundle of countries is something the recent trade literature has identified as potentially important for growth (Feenstra and Kee 2004, 2008).”
International Trade Without CES: Estimating Translog Gravity (2013, background): “…preferences include Feenstra and Weinstein (2010) who are concerned with estimating the welfare gains from increased variety through globalization, Feenstra and Kee (2008) who estimate the effect of expanding export variety on productivity, as well as Bergin and Feenstra (2009) who estimate…”
Product export diversification and sustainable economic growth in developing countries (2019, methodology): “Based on an extension of Krugman's 1979 model, these models, called "new new trade theory", introduce heterogeneity in productivity between firms into the international trade models (Melitz, 2003; Chaney, 2008; Feenstra and Kee, 2008).”
Measuring the Gains from Trade Under Monopolistic Competition (2010, unknown): “(2008); and the earlier contributions of Feenstra et al. (1999) and Funke and Ruhwedel (2000a,b; 2001).”
Trade Facilitation and Export Diversification (2011, background): “The idea is that a country's economic and social institutions should be correlated with distance from the equator (Hall and Jones, 1999).”
Trade Diversification, Income, and Growth: What Do We Know? (2013, unknown): “Other studies on developing countries include Levinsohn (1993) for Turkey, Harrison (1994) for Ivory Coast, Tybout and Westbrook (1995) for Mexico and Krishna, Mitra (1998) for India or Fernandes (2007) for Columbia.”
The Effect of WTO on the Extensive and the Intensive Margins of Trade (2013, methodology): “As a robustness check, we also use the weighted measures of Hummels and Klenow (2005) and Feenstra and Kee (2008), described in Section 3.3.”