The role of the gravity forces on firms’ trade

Abstract

. This paper offers both a theoretical framework and empirical evidence on the role that the two gravity forces, namely market size and geographical distance, have indirectly through imports, on firms’ exports patterns. The model shows that sourcing from bigger and closer markets implies higher productivity gains that, in turn, increase firms’ ability to enter export market as well as their export value. Exploiting data on product‐ and destination‐level transactions of a large panel of Italian firms, the paper shows that, on average, the indirect effects of the gravity forces are about one third of their direct effects. Résumé. Rôle des forces de gravité sur le commerce des entreprises. Cet article offre à la fois un cadre théorique et des preuves empiriques sur le rôle que deux forces de gravité, à savoir la taille du marché et l’éloignement géographique, peuvent indirectement exercer sur les profils d’exportation des entreprise en fonction de leurs importations. Ce modèle montre que l’approvisionnement sur des marchés plus vastes et plus proches engendre de meilleurs gains de productivité, augmentant ainsi la capacité des entreprises à intégrer le marché d’exportation ainsi que la valeur de leurs exportations. En s’appuyant sur des données provenant d’un large panel d’entreprises italiennes et relatives aux transactions par type de produit et par destination, cet article montre qu’en moyenne, les effets indirects des forces de gravité représentent environ un tiers de leurs effets directs.

Do imports of intermediate inputs generate higher productivity? Evidence from Ecuadorian manufacturing firms

“…For this reason, we introduce the term n it = ln M it M h it , which captures the intensity of the foreign and domestic intermediate inputs, as in Kasahara and Rodrigue (2008). Also, we introduce the term EI it = ln Sales it Sales h it , which captures the intensity of foreign and domestic sales, as in Navas et al (2020).…”

“…5 Some studies that analyse the effect of imports and firm productivity in developing countries are Kasahara and Rodrigue (2008), Zhang (2017), Caselli (2018), Zaclicever and Pellandra (2018), Abreha (2019), andCamino-Mogro et al (2021). 6 There are few studies that analyse these mechanisms in developed and developing countries (see, e.g., Kasahara & Rodrigue, 2008;Vogel & Wagner, 2010;Farinas & Martín-Marcos, 2010;Halpern et al, 2015;Elliott et al, 2016;Zhang, 2017;Máñez-Castillejo, Mínguez Bosque, et al, 2020;Navas et al, 2020). Konings, 2007;Bas & Strauss-Kahn, 2014;Fariñas et al, 2014;Hasan, 2002) and capital goods (Caselli, 2018;Mo et al, 2021); (ii) firms can exploit global specialisation and employ inputs at the forefront of knowledge and technology (Lööf & Andersson, 2010); (iii) firms access larger markets in which the superior technology that is embedded in advanced economy imports would boost firm productivity (Bas & Strauss-Kahn, 2014;Lööf & Andersson, 2010;Muûls & Pisu, 2009;Zaclicever & Pellandra, 2018).…”

“…First, we fill the gap in the literature by using Ecuadorian manufacturing firms to estimate the static and dynamic (learning‐by‐importing) effect of imports on productivity with a modified version of the Levinsohn and Petrin (2003) semi‐parametric estimator. This allows us to use two additional state variables and endogenise the law of motion for productivity, which enables past decisions to import and export to affect future productivity as in Navas et al (2020), Mo et al (2021), and Camino‐Mogro and López (2021) which allows us to test the static effect of imports and exports, and the learning‐by‐importing and learning‐by‐exporting hypotheses. This empirical approach is scarcely analysed because many studies do not use the export variable with the import variable.…”

“…, in logarithms. Also, we include the continuous measure of exports proposed by Navas et al (2020). This measure is the ratio of total sales to domestic sales, EI it = ln Sales it Sales h it , in logarithms.…”

What Is so Special about Robots and Trade?

“…As a consequence, higher productivity firms may face the export sunk costs and/or adapt or create new goods for the foreign customers (Kasahara and Lapham, 2012). Second, a direct linkage can exist between imports and exports, as imports may favour cost saving and technological upgrading of intermediate inputs (Bernard, Jensen, Redding and Schott, 2007;Turco and Maggioni, 2013;Bas and Strauss-Kahn, 2014;Feng, Li and Swenson, 2016;Navas, Serti and Tomasi, 2020).…”