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High-growth firms and international trade: evidence from Ecuador

Abstract:

The aim of this article is to open a detailed discussion about the relationship between international trade activities (export, import and trade openness) and the probability of becoming a high-growth firm. International trade has been widely related to a variety of outcomes, but there is no evidence of the relationship to high-growth firms. We study this issue by estimating a two-step probit model to correct the problem of self-selection that usually appears in trade research. Additionally, we use matching techniques as a robustness check to address possible endogeneity problems. We find that international trade is a consistent and robust path for becoming a high-growth firm. Several policy implications are derived from our work.