The Life-Cycle Dynamics of Exporters and Multinational Firms

73 Pages Posted: 23 Jan 2018

See all articles by Anna Gumpert

Anna Gumpert

Ludwig Maximilian University of Munich (LMU); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Andreas Moxnes

University of Oslo - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Natalia Ramondo

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS)

Felix Tintelnot

University of Chicago Department of Economics

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Date Written: December 05, 2017

Abstract

This paper studies the life-cycle dynamics of exporters and multinational enterprises (MNEs). We present a dynamic model of trade and MNE activity in which the mode of serving a market depends on the well-known proximity-concentration tradeoff. We show that the option of performing MNE activities in the model produces life-cycle patterns for exporters that differ from those in an export-only model. Calibrating our model to rich firm-level data from France and Norway, our main quantitative finding is that a reduction in trade costs triggers much larger responses in growth rates and exit rates, for young exporters, in the model with MNEs than in the model without MNEs. We also show that the model is largely consistent with a set of new facts on the joint life-cycle dynamic behavior of exporters and MNEs.

Keywords: international trade, exporters, multinational firm, Markov process, sunk cost, proximity-concentration tradeoff, trade liberalization

JEL Classification: F100, F200

Suggested Citation

Gumpert, Anna and Moxnes, Andreas and Ramondo, Natalia and Tintelnot, Felix, The Life-Cycle Dynamics of Exporters and Multinational Firms (December 05, 2017). CESifo Working Paper Series No. 6758. Available at SSRN: https://ssrn.com/abstract=3106716

Anna Gumpert (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

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Germany

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CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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Andreas Moxnes

University of Oslo - Department of Economics ( email )

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Norway

Centre for Economic Policy Research (CEPR) ( email )

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National Bureau of Economic Research (NBER) ( email )

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Natalia Ramondo

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS) ( email )

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La Jolla, CA 92093-0519
United States

Felix Tintelnot

University of Chicago Department of Economics ( email )

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Chicago, IL 60637
United States

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