New Hot Paper Comment by Elhanan Helpman

Elhanan Helpman answers a few questions about this month's new hot paper in the field of Economics & Business.

From •>>May 2005

Field: Economics & Business
Article Title: Export versus FDI with heterogeneous firms
Authors: Helpman, E;Melitz, MJ;Yeaple, SR
Journal: AMER ECON REV
Volume: 94
Page: 300-316
Year: MAR 2004
* Harvard Univ, Dept Econ, Cambridge, MA 02138 USA.
* Harvard Univ, Dept Econ, Cambridge, MA 02138 USA.
* Tel Aviv Univ, IL-69978 Tel Aviv, Israel.
* Natl Bur Econ Res, Cambridge, MA 02138 USA.
* Ctr Econ Policy Res, London, England.
* Univ Penn, Dept Econ, Philadelphia, PA 19104 USA.

Why do you think your paper is highly cited?

It confirms empirically the importance of firm heterogeneity within industries for explaining international trade and foreign direct investment.

Does it describe a new discovery or a new methodology that’s useful to others?

It provides evidence on an emerging new theory of international trade and investment.

Could you summarize the significance of your paper in layman’s terms?

Most international trade theories used to be about trade across sectors. In recent years new evidence showed that there are major differences across firms within sectors in terms of their participation in international trade and foreign direct investment. For example, exporting firms are more productive than non-exporting firms and multinational firms are more productive than exporting firms that are not multinational. As a result the theory has been extended to account for these phenomena. We have provided further extensions and we showed that their implications are borne out by the data.

How did you become involved in this research?

This was a logical step in the needed progression of research on this topic.

Professor Elhanan Helpman
Galen L. Stone Professor of International Trade
Department of Economics
Harvard University
Cambridge, MA, USA

ESI Special Topics, May 2005
Citing URL - http://www.esi-topics.com/nhp/2005/may-05-ElhananHelpman.html