Disentangling barriers to internationalization

Disentangling barriers to internationalization

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Article ID: iaor2012699
Volume: 45
Issue: 1
Start Page Number: 41
End Page Number: 63
Publication Date: Feb 2012
Journal: Canadian Journal of Economics/Revue canadienne d'conomique
Authors: , ,
Keywords: Germany, productivity, world trade
Abstract:

Recent literature on multinational firms has focused on low productivity as a barrier to the internationalization of firms. But labour market frictions or financial constraints may also hamper internationalization. In order to assess the importance of these barriers, we present new empirical evidence on the extensive and intensive margin of exports and foreign direct investment (FDI) based on micro-level data of German firms. First, we find a positive impact of firm size and productivity on firms’ international activities. Second, labour market frictions can constitute barriers to foreign activities. Third, self-reported financial constraints have no impact on firms’ internationalization decisions. JEL classification: F23, G2

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