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Disentangling barriers to internationalization

Authors


  • Arndt is also affiliated with IAW Tübingen. Buch is also affiliated with CESifo and IAW Tübingen. Funding under the European Community's Seventh Framework Programme (FP7/2007–2013) under grant agreement No. 225551 and data access by the Center for Research Data of the Institute for Employment Research at the Federal Employment Agency in Nuremberg are gratefully acknowledged. We thank Nils Drews and Alexandra Schmucker for providing assistance with access to the data and Nina Heuer and Tillman Schwörer for excellent research assistance. Giorgio Barba Navaretti, Bernhard Boockmann, Gabriel Felbermayr, Margarita Katsimi, Marc Muendler, Assaf Razin, two anonymous referees, participants at the Tübingen-Hohenheim Economics (THE) workshop in December 2009, the International Workshop on The International Firm: Patterns and Modes in Milan, the European Trade Study Group (ETSG) 2008, and at the CESifo Delphi Conference 2009 have provided helpful suggestions and comments on an earlier draft. All errors and inaccuracies are solely in our own responsibility. Email: claudia.buch@uni-tuebingen.de

Abstract

Abstract.  Recent literature on multinational firms has focused on low productivity as a barrier to the internationalization of firms. But labour market frictions or financial constraints may also hamper internationalization. In order to assess the importance of these barriers, we present new empirical evidence on the extensive and intensive margin of exports and foreign direct investment (FDI) based on micro-level data of German firms. First, we find a positive impact of firm size and productivity on firms’ international activities. Second, labour market frictions can constitute barriers to foreign activities. Third, self-reported financial constraints have no impact on firms’ internationalization decisions. JEL classification: F23, G2

Abstract

La littérature récente sur les firmes plurinationales a mis l’accent sur la faible productivité en tant que barrière à l’internationalisation des firmes. Mais les frictions dans le marché du travail et les contraintes financières peuvent aussi nuire à l’internationalisation. Afin d’évaluer l’importance de ces diverses barrières, on présente de nouvelles données empiriques (micro-données sur des firmes allemandes) sur les marges intensives et extensives des exportations et de l’investissement direct à l’étranger. D’abord, on découvre un impact positif de la taille de la firme et de sa productivité sur ses activités internationales. Ensuite, les frictions dans le marché du travail peuvent constituer des barrières aux activités internationales. Enfin, les contraintes financières telles que les firmes les rapportent elles-mêmes ne semblent pas avoir d’impact sur les décisions d’internationalisation.

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