According to the Melitz [2003. 'The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity.' Econometrica 71: 1695-1725] model, potential exporters have to be sufficiently productive to overcome the entry costs of foreign markets. Once firms pass this productivity threshold, they all export. However, empirical evidence indicates that a substantial share of highly productive top-performing firms does not export. In this paper, we focus specifically on this group of high-performing non-exporters and identify the factors that prevent them from successfully exporting. We employ a large Dutch administrative dataset containing both small and large firms in services and manufacturing for the period 2010-2016. Our main findings are twofold. First, controlling for high productivity identifies other factors that need to be fulfilled for exporting firms. Firm size, import status, and foreign ownership are important determinants of a firm's future export activity. Second, firm location is crucial. A location in more peripheral areas increases the probability that high-productive firms do not export, whereas a location close to the border increases export probabilities.

Despite the large urban–rural education gap observed in most countries, little attention has been paid to whether cities actually enjoy a comparative advantage in the production of human capital. Using Dutch administrative data, this paper finds that children growing in urban regions consistently attain higher levels of human capital compared with children in rural regions, conditional on observed cognitive ability and various family characteristics. The elasticity of university attendance with respect to population density is 0.07, which is robust across a variety of specifications. Hence, the paper offers a different explanation to explain the recent success of cities.

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