Exports Versus FDI in German Manufacturing: Firm Performance and Participation in International Markets

By Jens Matthias Arnold, K. Hussinger. Social Science Research Network, 2010

169 citations recorded by the source corpus.

This paper tests some of the predictions of recent advances in trade theory that have focused on different trade patterns of firms within the same sector. Helpman, Melitz and Yeaple (2005) develop a model in which innate productivity differences between firms determine the degree of international engagement of firms: The least productive firms produce for the domestic market, better performers engage in export activities, and the top firms establish foreign subsidiaries. Using German firm-level data from 1996 to 2002, we test this prediction using non-parametric methods, by examining the distribution functions of the three subsets of firms for stochastic dominance. Rather than just comparing first moments, this technique allows us to compare productivity over the entire distribution. Our results show robust support for the prediction from theory.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/7187dac1fa161338ed99e0408ece46d0a658d35d

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In Economics and Econometrics

Citations in the corpus

Analysis of Productivity Differences among Foreign and Domestic Firms: Evidence from Germany (2008, background): “Recent work by Arnold and Hussinger (2006) tests the prediction by Helpman et al. (2004) that the most productive firms in an economy are those that invest abroad.”
Foreign direct investment and firm performance: an empirical analysis of Italian firms (2016, unknown): “The same results are confirmed for Germany (Wagner 2006; Arnold and Hussinger 2010) and France (Engel and Procher 2012).”
Expanding to outward foreign direct investment or not? A multi-dimensional analysis of entry mode transformation of Chinese private exporting firms (2014, background): “This predication has received empirical support in a number of recent studies of developed countries including Germany (Arnold & Hussinger, 2010; Wagner, 2006), Italy (Castellani & Zanfei, 2007), France (Engel & Procher, 2011), Ireland (Girma et al., 2004), UK (Girma et al., 2005), Japan (Head & Rie”