Firms in International Trade: Importers’ and Exporters’ Heterogeneity in Italian Manufacturing Industry

Abstract

AbstractCombining data on structural characteristics and economic performance for a large sample of Italian firms with data on exporting and importing activity, we uncover evidence supporting recent theories on firm heterogeneity and international trade, together with some new facts. In particular, we find that importing is associated with substantial firm heterogeneity. First, we document that trade is more concentrated than employment and sales, and show that importing is even more concentrated than exporting both within sectors and along the sector‐ and country‐extensive margins. Second, while supporting the fact that firms involved in both are the best performers, we also find that firms involved only in importing activities perform better than those involved only in exporting. Our evidence suggests there is a strong self‐selection effect in the case of importers and the performance premia of internationalised firms correlate relatively more with the degree of geographical and sectoral diversification of imports.