The Collective Action of Global Entrepreneurs

Abstract:     
Productivity sometimes depends on industry specific public goods, like standards of production, the existence of suppliers of intermediate inputs or information about technology and markets. Understanding the provision of these inputs remains elusive, however, since these public goods are heterogeneous and there is no systematic recording system analogous to the one for patents. As contribution, this paper explores the nature of participation in Business Association as a proxy for this cooperative activity of international entrepreneurs around the world. Using enterprise surveys from 71 countries the paper shows that exporters and importers participate more than non exporters in Business Associations, even after controlling for country and industrial sector, as well as conditioning on productivity. This additional participation of exporters is more intense in smaller countries. When exporters are asked what they value the most from Business Associations, they disproportionally mention "productivity and information" services over "lobby and negotiation" services. The results are hard to reconcile with models in which the only role of Business Associations is to buy tariff protection or to collude in the product market. In contrast, our results are consistent with Alfred Marshall's (1920) view that constructive cooperation is relatively more important for the duties of international trade.

Number of Pages in PDF File: 43

Keywords: competitiveness, business and government, special interest politics, private sector development

JEL Classification: L26, F14, O4

working papers series