We use a representative and cross-country comparable sample of manufacturing firms (EFIGE) to document patterns of interaction among firm-level internationalization, innovation and productivity across seven European countries (Austria, France, Germany, Hungary, Italy, Spain, United Kingdom). We find strong evidence of positive association among the three firm-level characteristics across countries and sectors. We also find that the positive correlation between internationalization and innovation survives after controlling for productivity, with some evidence of causality running from the latter to the former. Our analysis suggests that export promotion per se is unlikely to lead to sustainable internationalization because internationalization goes beyond export and because, in the medium-to-long term, internationalization is driven by innovation. We recommend coordination and integration of internationalization and innovation policies 'under one roof' at both the national and EU levels, and propose a bigger coordinating role for EU institutions.We are grateful to three anonymous referees. We also thank Marco Manacorda, Catherine Thomas, Myriam

This paper analyzes the performance of global value chains during the trade collapse.To do so, it exploits a unique transaction-level dataset on French …rms containing information on cross-border monthly transactions matched with data on worldwide intra-…rm linkages as de…ned by property rights (multinational business groups, hierarchies of …rms).This newly assembled dataset allows us to distinguish …rm-level transactions among two alternative organizational modes of global value chains: internalization of activities (intragroup trade/trade among related parties) or establishment of supply contracts (arm's length trade/trade among unrelated parties). After an overall assessment of the role of global value chains during the trade collapse, we document that intra-group trade in intermediates was characterized by a faster drop followed by a faster recovery than arm's length trade. Ampli…ed ‡uctuations in terms of trade elasticities by value chains have been referred to as the "bullwhip e¤ect" and have been attributed to the adjustment of inventories within supply chains. In this paper we …rst con…rm the existence of such an e¤ect due to trade in intermediates, and we underline the role that di¤erent organizational modes can play in driving this adjustment.JEL codes: F23, F15, L22.Keywords: trade collapse, multinational …rms, global value chains, hierarchies of …rms , vertical integration. Non-technical summaryThe "Great Trade Collapse" has been one of the most striking features of the recent global financial crisis, with the ongoing recovery still driving a wedge between output and trade. The drop in trade flows has been very fast, particularly severe and synchronized across all countries, as several empirical studies already suggest. Such features make the current trade drop quite unique among the many episodes of trade decline typically associated to economic crises, and a number of transmission mechanisms have been proposed which could account for these peculiarities. Among those mechanisms, a particular role has been attributed to the emergence over the last decade of global supply chains, and to the different compositional effects of the demand shock entailed by vertical linkages on trade and GDP.In this paper we exploit transaction-level French trade data matched with ownership data for the period 2007-2009 to find evidence of a role for global value chains in explaining the magnitude of the trade collapse. Consistent with other results, we find that trade in intermediates has been the main driver of the trade collapse. However we also find that different organizational modes of the supply chain entailed different dynamic responses: related-party trade in intermediates exhibits a faster drop followed by a faster rebound with respect to arm's length trade in intermediates. In other words, trade originated within multinational groups seems to have reacted faster to the negative demand shock but has also recovered faster in the following months than arm's length trade. Among the alternative channels of t...

We develop a simple test to assess whether horizontal spillover effects from multinational to domestic firms are endogenous to the market structure generated by the incremental entry of the same multinationals. In particular, we analyze the performance of a panel of 10,650 firms operating in Romania in the period 1995-2001. Controlling for the simultaneity bias in productivity estimates through semi-parametric techniques, we find that changes in domestic firms' TFP are positively related to the first foreign investment in a specific industry and region, but get significantly weaker and become negative as the number of multinationals that enter in the considered industry/region crosses a specific threshold. These changing marginal effects can explain the lack of horizontal spillovers arising in traditional model designs. We also find these effects to vary between manufacturing and service, suggesting as a possible explanation a strategic change in technology transfer decisions by multinational firms as the market structure evolves.

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This paper adds new empirical evidence on the mutual relationships between credit constraints, total factor productivity, Research and Development (R&D) investments and exporting, by jointly considering them in a simultaneous equation framework. Our empirical analysis focuses on a large sample of manufacturing firms from France, Germany, Italy and Spain. Our results confirm the well-known mutual positive correlation among exporting, R&D and firm's productivity. They also show the existence of a mutual relationship between exporting, productivity and credit constraints: exporters and high productivity firms are less likely to be credit constrained, while better access to credit is associated with larger productivity and a higher probability of exporting. By contrast, we find no significant relation between investing in R&D and the probability to be credit constrained, conditional on exporting. This suggests that efficiency-improving strategies, mediated by the existence of credit constraints, are at the core of firm growth achieved through exporting and innovation

This paper analyzes the performance of global value chains during the trade collapse.To do so, it exploits a unique transaction-level dataset on French …rms containing information on cross-border monthly transactions matched with data on worldwide intra-…rm linkages as de…ned by property rights (multinational business groups, hierarchies of …rms).This newly assembled dataset allows us to distinguish …rm-level transactions among two alternative organizational modes of global value chains: internalization of activities (intragroup trade/trade among related parties) or establishment of supply contracts (arm's length trade/trade among unrelated parties). After an overall assessment of the role of global value chains during the trade collapse, we document that intra-group trade in intermediates was characterized by a faster drop followed by a faster recovery than arm's length trade. Ampli…ed ‡uctuations in terms of trade elasticities by value chains have been referred to as the "bullwhip e¤ect" and have been attributed to the adjustment of inventories within supply chains. In this paper we …rst con…rm the existence of such an e¤ect due to trade in intermediates, and we underline the role that di¤erent organizational modes can play in driving this adjustment.JEL codes: F23, F15, L22.Keywords: trade collapse, multinational …rms, global value chains, hierarchies of …rms , vertical integration. Non-technical summaryThe "Great Trade Collapse" has been one of the most striking features of the recent global financial crisis, with the ongoing recovery still driving a wedge between output and trade. The drop in trade flows has been very fast, particularly severe and synchronized across all countries, as several empirical studies already suggest. Such features make the current trade drop quite unique among the many episodes of trade decline typically associated to economic crises, and a number of transmission mechanisms have been proposed which could account for these peculiarities. Among those mechanisms, a particular role has been attributed to the emergence over the last decade of global supply chains, and to the different compositional effects of the demand shock entailed by vertical linkages on trade and GDP.In this paper we exploit transaction-level French trade data matched with ownership data for the period 2007-2009 to find evidence of a role for global value chains in explaining the magnitude of the trade collapse. Consistent with other results, we find that trade in intermediates has been the main driver of the trade collapse. However we also find that different organizational modes of the supply chain entailed different dynamic responses: related-party trade in intermediates exhibits a faster drop followed by a faster rebound with respect to arm's length trade in intermediates. In other words, trade originated within multinational groups seems to have reacted faster to the negative demand shock but has also recovered faster in the following months than arm's length trade. Among the alternative channels of t...

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