Is the productivity premium of internationalized firms technology-driven?

Empirical Economics, forthcoming

34 Pages Posted: 6 Apr 2021

See all articles by Filippo Belloc

Filippo Belloc

University of Siena - Department of Economics and Statistics

Michele Battisti

University of Palermo; Luiss Guido Carli University

Massimo Del Gatto

CRENOS - Centre for North South Economic Research; 'Gabriele d'Annunzio' University of Chieti-Pescara - Faculty of Economics

Date Written: June 4, 2020

Abstract

We ask whether the productivity advantage of internationalized firms documented by the international trade literature can be more correctly interpreted in terms of proximity to the “technological frontier”. We provide a positive answer relying on a methodology (based on mixture models) to unbundle technology and TFP by estimating “technology-specific” production function parameters. Exploiting the detailed information provided by the EFIGE database (a sample of firms distributed across Austria, France, Germany, Hungary, Italy, Spain, United Kingdom), we report technology gaps (with respect to the frontier) more than three times larger than TFP gaps on average. We also find sizable technology advantages for firms undertaking FDI and/or exporting to other EU countries or to China, for importers of materials, and for firms having competitors in China and the US. Medium and large firms feature a larger technology premium, even more when they operate in country-sectors that are more exposed to import competition from China. Younger firms use better technologies but less effectively.

Keywords: TFP, technology, productivity premium, trade models with heterogeneous firms, selection effect

JEL Classification: F12, F14, D24, 033

Suggested Citation

Belloc, Filippo and Battisti, Michele and Del Gatto, Massimo and Del Gatto, Massimo, Is the productivity premium of internationalized firms technology-driven? (June 4, 2020). Empirical Economics, forthcoming, Available at SSRN: https://ssrn.com/abstract=3819298

Filippo Belloc (Contact Author)

University of Siena - Department of Economics and Statistics ( email )

Piazza San Francesco 7
Siena, Siena 53100
Italy

Michele Battisti

University of Palermo ( email )

Viale delle Scienza
Palermo, 90128
Italy

Luiss Guido Carli University ( email )

Via O. Tommasini 1
Rome, Roma 00100
Italy

Massimo Del Gatto

CRENOS - Centre for North South Economic Research ( email )

Cagliari
Italy

'Gabriele d'Annunzio' University of Chieti-Pescara - Faculty of Economics ( email )

Faculty of Economics - Department of Economics
Viale Pindaro, 42
Pescara, 65127
Italy

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