Import Competition, Domestic Regulation and Firm-Level Productivity Growth in the OECD

This paper examines how import penetration affects firms' productivity growth taking into account the heterogeneity in firms' distance to the efficiency frontier and country differences in product market regulation. Using firm-level data for a large number of OECD countries, the analysis r...

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Bibliographic Details
Main Author: Ben Yahmed, Sarra
Other Authors: Dougherty, Sean
Format: eBook
Language:English
Published: Paris OECD Publishing 2012
Series:OECD Economics Department Working Papers
Subjects:
Online Access:
Collection: OECD Books and Papers - Collection details see MPG.ReNa
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520 |a This paper examines how import penetration affects firms' productivity growth taking into account the heterogeneity in firms' distance to the efficiency frontier and country differences in product market regulation. Using firm-level data for a large number of OECD countries, the analysis reveals non-linear effects of both sectoral import penetration and de jure product market regulation measures depending on firms' positions along the global distribution of productivity levels. The heterogeneous effects of international competition and domestic product market regulation on firm-level productivity growth are consistent with a neo-Schumpeterian view of trade and regulation. Close to the technology frontier, import competition has a strongly positive effect on firm-level productivity growth, with stringent domestic regulation reducing this effect substantially. However, far from the frontier, neither import competition nor its interaction with domestic regulation has a statistically significant effect on firm-level productivity growth. The results suggest that insufficient attention has been made in the trade literature to within-firm productivity growth