This work studies the effect of an increase in competition in foreign markets on firms' productivity growth. The main mechanism analyzed is the reallocation of inputs, within the firms, towards product lines where firms are more efficient.
During the period 2001-2015, the increase in competition faced by firms in foreign markets contributed to productivity growth among manufacturing multi-product exporters. This productivity gains are driven by the concentrations of sales in best products, that is those where firms are most efficient. Overall, the reallocation of inputs across product line within the firms, can account of 30 per cent of aggregate productivity growth in the manufacturing sector.
Published in 2020 in: The World Economy, v. 43, 5, pp. 1434-1451
