Evidence from South-Eastern Europe: Does International Openness Affect the Productivity of Local Firms?

28 Pages Posted: 16 Jun 2009

See all articles by Jože P. Damijan

Jože P. Damijan

University of Ljubljana, Slovenia - Department of International Economics

José de Sousa

Universite Paris I Pantheon-Sorbonne; Université Rennes I

Olivier Lamotte

Paris School of Business

Date Written: 0000

Abstract

This paper examines how international openness can change firm productivity in south-eastern Europe (SEE), a crucial question for middle-income countries. Using firm-level data for six transition economies over the 1995–2002 period, we identify whether foreign ownership and propensity to trade with more advanced countries can bring about higher learning effects. We find that: (i) foreign ownership has helped restructure and enhance the productivity of local firms in four out of six countries; (ii) exporting to advanced markets has a larger impact on productivity growth in four countries, especially when the firm's absorptive capacity is taken into account; (iii) in contrast, exporting to the less competitive markets of the former Yugoslavia seems to negatively affect productivity growth in three countries; and (iv) learning effects from importing are similar to those from exporting. Our results suggest that trade liberalization is not uniformly beneficial. Regional composition of trade flows and absorptive capacity of local firms matter. Thus, trade liberalization within the SEE region may not provide a substitute for a general trade liberalization which includes access to the more competitive markets of countries belonging to the Organization for Economic Co-operation and Development.

Suggested Citation

Damijan, Joze P. and de Sousa, José and Lamotte, Olivier, Evidence from South-Eastern Europe: Does International Openness Affect the Productivity of Local Firms? (0000). Economics of Transition, Vol. 17, Issue 3, pp. 559-586, July 2009. Available at SSRN: https://ssrn.com/abstract=1420368 or http://dx.doi.org/10.1111/j.1468-0351.2009.00361.x

Joze P. Damijan (Contact Author)

University of Ljubljana, Slovenia - Department of International Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia
+386 61 189 24 00 (Phone)
+386 61 189 26 98 (Fax)

José De Sousa

Universite Paris I Pantheon-Sorbonne ( email )

106-112 Bd. de l'Hopital
75634 Paris Cedex 13
France

Université Rennes I ( email )

11 Rue Jean Macé
Rennes, Rennes 35700
France

Olivier Lamotte

Paris School of Business ( email )

59 rue Nationale
75013
France

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