The theoretical determinants of firm size and the firm size-exporting relationship among developing nations.

Abstract

What factors determine the decision of a firm to participate in the export market? This paper looks into the firm level determinants of both size and international trade. A more comprehensive understanding of the forces behind the firm size-exporting relationship is developed. The relationship between firm size and exporting is tested using a cross-country dataset of developing countries to determine the extent of country specific influences on international trade. These theoretical considerations and cross country tests indicate a positive, significant relation between exporting and firm size. This relation is robust across all countries tested and stands up to all the robustness checks examined in this paper. Regional or country specific indicators affect the level of the relationship, but not its nature.