Globalization Drives Strategic Product Switching
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
Using firm-level data for Estonia for the years 1997-2005, we analyze the impact of international competition on firm dynamics, considering both firm closedown and product switching. We contribute to the literature in two important ways: (1) this is the first paper to study the determinants of exit and product switching in an emerging market; and (2) we consider explicitly the role of export opportunities. Our results indicate that globalization does not affect firm exit significantly but it is an important factor explaining product switching. Previous studies on industrial countries have shown that product switching has been a defensive strategy against low-cost imports. In contrast, our results suggest that Estonian firms have switched products as an offensive strategy to take advantage of the export opportunities created by trade liberalization.
Series:
Working Paper No. 2008/246
Subject:
Commodity markets Competition Economic sectors Exports Financial markets Imports International trade Manufacturing
English
Publication Date:
October 1, 2008
ISBN/ISSN:
9781451871043/1018-5941
Stock No:
WPIEA2008246
Pages:
44
Please address any questions about this title to publications@imf.org