Firms in International Trade: Importers’ and Exporters’ Heterogeneity in Italian Manufacturing Industry

Abstract

This paper offers a portrait of Italian firms that trade goods. Combining data on firms' structural characteristics and economic performance with data on their exporting and importing activity, we uncover evidence supporting recent theories on firm heterogeneity and international trade, together with some new facts. In particular, we find that importing can be as important as exporting as a source of firm heterogeneity. First, we document that trade is more concentrated than employment and sales, and we show that import is even more concentrated than export both within sectors and along the sector and country extensive margins. Second, while supporting the fact that firms involved in both importing and exporting (two-way traders) are the best performers, we also find that firms involved only in importing activities perform better than those involved only in exporting. We submit that this may have to do with being mainly importers of high-tech capital goods. Third, the performance premia of internationalized firms correlate relatively more with the degree of geographical and sectoral diversification of imports.JEL codes: F10, F16, J21

Exit from Exporting: Does Being a Two-way Trader Matter?

“…The existence of better performance characteristics for firms that simultaneously export and import was initially provided by Bernard et al (2007) for U.S. firms, and it was also reported by Muûls and Pisu (2009) for Belgium firms, Vogel and Wagner (2010) for German firms, Castellani et al (2010) for Italian , Hayakawa and Matsuura (2014) for Japanese firms and Dalgic et al (2015) for Turkish firms. Focusing specifically on imports of intermediate inputs, Aristei et al (2013) for eastern European and central Asian firms and Veugelers et al (2013) for firms from a group of countries from the EU (France, Italy, Spain, the UK, Germany, Austria and Hungary) point in the same direction.…”

A survey of empirical studies using transaction level data on exports and imports

“…It covers only papers that are written in English, and that use data on cross-border transactions with detailed information on the products traded and the countries of destination or origin. While the first selection criterion is, hopefully, not too restrictive, the second might be considered to lead to an exclusion of important papers that look at who trades what with whom based on data from surveys of firms [like the papers by Lawless (2009) or Iacovone and Javorcic (2010)] or on information derived from records of foreign trade activities that were matched to firm-level survey data [like in Castellani et al (2010)]. This focus of the survey, however, seems adequate given the now large number of papers that use ''true'' transaction level data from countries all over the world.…”

Trading many goods with many countries: Exporters and importers from German manufacturing industries

“…Importing is associated with fixed costs that are sunk costs, because the import agreement is preceded by a search process for potential foreign suppliers, inspection of goods, negotiation, contract formulation, learning about legal rules and regulations for doing business in 12 a foreign country etc. Furthermore, there are sunk costs of importing due to the learning and acquisition of customs procedures (see Kasahara and Lapham (2008), Andersson et al (2008), Castellani et al (2010) focus resources and to specialize on activities where it has particular strengths.…”