Firm heterogeneity and exports in the Netherlands: Identifying export potential beyond firm productivity

Brakman, S., Garretsen, H., van Maarseveen, R. & Zwaneveld, P., Feb-2020, In : Journal of international trade & economic development. 29, 1, p. 36-68 33 p.

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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 two-fold. 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.

Original languageEnglish
Pages (from-to)36-68
Number of pages33
JournalJournal of international trade & economic development
Issue number1
Publication statusPublished - Feb-2020


  • Firm heterogeneity, productivity, export behavior, location, INTERNATIONAL-TRADE, PERFORMANCE, COSTS

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