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A rapidly expanding literature on firm heterogeneity and firm level globalisation strategies has developed over the last decade. There are new insights on why some firms export and others do not, why some firms fail to survive in export markets and some choose to produce overseas rather than export. This article provides a synthesis and evaluation of this literature. It reviews both new theories of firms in an open economy context and the extensive microeconometric evidence base, which has now developed. It highlights the implications of this evidence base for policy and includes an assessment of how the research agenda may evolve. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

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Exporting involves sunk costs, so some firms export whilst others do not. This proposition derives from a number of models of firm behavior and has been exposed to microeconometric analysis. Evidence from the latter suggests that exporting firms are generally more productive than nonexporters. They self-select, in that they are more productive before they enter export markets, but the evidence suggests that entry does not make them any more productive. This paper investigates exporting and firm performance for a large panel of UK manufacturing firms, applying matching techniques. The authors find that exporters are more productive and they do self-select. In contrast to other evidence, however, exporting further increases firm productivity. Copyright Blackwell Publishing Ltd 2004..

Endogenous growth models, such as Barro~1990!, predict that government expenditure and taxation will have both temporary and permanent effects on growth. We test this prediction using panels of annual and period-averaged data for OECD countries during 1970-95, isolating long-run from short-run fiscal effects. Our results strongly support the endogenous growth model and suggest that long-run fiscal effects are not fully captured by period averaging and static panel methods. Unlike previous investigations, our estimates are free from biases associated with incomplete specification of the government budget constraint and do not appear to result from endogeneity of fiscal or investment variables. JEL Classification: H30, O40Validation du modèle de croissance endogène: dépenses publiques, fiscalité et croissance à long terme. Des modèles de croissance endogène comme celui de Barro~1990! prédisent que dépenses gouvernementales et fiscalité vont avoir des effets temporaires et permanents sur la croissance. On met cette prévision au test à l'aide de données annuelles et pour certaines moyennes couvrant des sous-périodes pour les pays de l'OCDE~1970-95! dans le but de départager les effets à court et à long terme. Les résultats valident fortement le modèle de croissance endogène et suggèrent que les effets fiscaux à long terme ne sont pas pleinement capturés par des méthodes utilisant des moyennes ou des méthodes statiques. Contrairement aux résultats d'enquêtes antérieures, les résultats proposés ne souffrent pas de distorsions attribuables à une spécification incomplète de la contrainte budgétaire du gouvernement, et ne semblent pas être l'effet d'écho de l'endogénéité des variables fiscales et de l'investissement.

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The literatures testing for aggregate short-run or long-run growth impacts of fiscal policy use quite different methodologies. The former generally focuses on temporary fiscal 'shocks'; the latter typically have no short-run dynamics or assume homogeneity. We use regression methods that treat heterogeneous short-run dynamics explicitly within a long-run model. Results suggest that previously estimated 'long-run' growth effects of fiscal policy are typically achieved quickly, consistent with results from short-run models. In principle these short-run effects 'persist'; in practice regular fiscal policy changes in OECD countries mean that persistent increases or decreases in growth rates are rare.The recent global recession has brought renewed interest in the question: 'Can fiscal policy affect the growth rate of output?' If so, are these effects temporary (affecting only output levels over the longer-run) or permanent (so that output growth rates are persistently higher)? Perhaps surprisingly, the literatures looking for growth impacts of fiscal policy over the short-run (say, up to five years) and over the longer-run of 10 years or more, have tended to be quite distinct and followed quite different methodologies.This article considers how far the results from these two literatures are consistent. To do so, we apply the 'heterogeneous panel' econometric methods -Mean Group and Pooled Mean Group -proposed by Pesaran and Smith (1995), Pesaran (1997) and Pesaran et al. (1999) to an annual panel dataset for OECD countries. These methods allow both long-run equilibrium relationships, and short-run dynamic adjustments around those equilibria, to be investigated simultaneously. In brief, our results support the conclusion that changes in fiscal structure (that is, between different types of tax and ⁄ or forms of expenditure) can affect GDP growth rates over the long-run, at least to the extent these are captured by the 30-35 year time dimension of our dataset. This 'long-run result', however, appears to be achieved within a short period of a few years following relevant fiscal changes, suggesting relatively rapid short-run adjustment to a new long-run growth rate equilibrium.