TY - JOUR A1 - Eckel, Carsten A1 - Iacovone, Leonardo A1 - Javorcik, Beata A1 - Neary, J. Peter T1 - Testing the Core‐competency Model of Multi‐product Exporters JF - Review of International Economics N2 - We review the implications of the “core‐competence” model of multi‐product firms, including the “market‐size puzzle”: for most countries, the world market is much larger than the home market, while the costs of accessing foreign markets are relatively low; hence the model predicts that most domestic firms should export more of their core products than they sell domestically; yet, in practice, we do not observe this. Extending the model to allow for investment in export market penetration resolves the puzzle and Mexican data confirm its predictions: in particular, only the largest firms exhibit the dominance of exports over home sales. Y1 - 2016 U6 - https://doi.org/10.1111/roie.12234 VL - 24 IS - 4 SP - 699 EP - 716 ER - TY - RPRT A1 - Iacovone, Leonardo A1 - Pereira-López, Mariana A1 - Schiffbauer, Marc T1 - Competition makes it better: Evidence on when firms use it more effectively N2 - This paper uses a unique firm-level data set for Mexico, with information never used for research before, to assess how use of information technology (IT henceforth) influences firm performance. Further, the paper explores if, in the context of increasing competition from China, this effect is different for firms more strongly affected by competition where incentives for upgrading and innovation may be more intense. In this perspective, the paper analyzes the complementarity between IT and other changes spurred by competition, taking advantage of the exogenous shock generated by Chinese competition. The results indicate that IT use has higher effects over productivity in the case of firms facing higher competition from China, in the domestic market and in the U.S. market. Furthermore, the paper shows how these changes appear to be driven by complementary investments in innovation and organizational changes. Y1 - 2016 UR - https://openknowledge.worldbank.org/handle/10986/24212 ER - TY - RPRT A1 - Iacovone, Leonardo A1 - Pereira-López, Mariana A1 - Schiffbauer, Marc T1 - ICT use, competitive pressures and firm performance in Mexico T2 - Policy Research Working Papers N2 - This paper presents a set of stylized facts on the relation between information and communications technology (ICT) use, firm performance, and competition. Taking advantage of a novel firm-level data set on information and communications technology for Mexico, the study finds that firms facing higher competition appear to have more incentives to increase their use of information and communications technology. Accordingly, although there is indeed a positive relation between information and communications technology use and firm performance, this effect is greater for firms that face higher competition pressures, which is consistent with the theoretical predictions of the trade-induced technical change hypothesis. Y1 - 2016 UR - https://openknowledge.worldbank.org/bitstream/handle/10986/24201/ICT0use00compe0erformance0in0Mexico.pdf?sequence=1&isAllowed=y U6 - https://doi.org/10.1596/1813-9450-7629 ET - April 2016 ER - TY - JOUR A1 - Iacovone, Leonardo A1 - De Hoyos, Rafael E T1 - Economic Performance under NAFTA: A Firm-Level Analysis of the Trade-productivity Linkages JF - World Development N2 - Did the North American Free Trade Agreement make Mexican firms more productive? If so, through which channels? This paper addresses these questions by deploying an innovative microeconometric approach that disentangles the various channels through which integration with the global markets (via international trade) can affect firm-level productivity. The results show that the North American Free Trade Agreement stimulated the productivity of Mexican plants via: (1) an increase in import competition and (2) a positive effect on access to imported intermediate inputs. However, the impact of trade reforms was not identical for all integrated firms, with fully integrated firms (i.e. firms simultaneously exporting and importing) benefiting more than other integrated firms. Contrary to previous results, once self-selection problems are solved, the analysis finds a rather weak relationship between exports and productivity growth. Y1 - 2013 UR - https://doi.org/10.1016/j.worlddev.2012.09.008 VL - 44 SP - 180 EP - 193 ER - TY - JOUR A1 - Cardot, Olivier A1 - Iacovone, Leonardo A1 - Pierola, Martha Denisse A1 - Rauch, Ferdinand T1 - Success and failure of African exporters JF - Journal of Development Economics N2 - Using a new dataset with transaction-level export data from four African countries (Malawi, Mali, Senegal and Tanzania), this paper explores the determinants of success upon entry into export markets, defined as survival beyond the first year at the firm-product-destination level. We find that the probability of success rises with the number of same-country firms exporting the same product to the same destination, suggesting the existence of cross-firm externalities. We explore several conjectures on the determinants of these externalities and provide evidence suggestive of information spillovers, possibly mediated through the banking system. Y1 - 2013 U6 - https://doi.org/10.1016/j.jdeveco.2012.12.004 VL - 101 SP - 284 EP - 296 ER - TY - JOUR A1 - Iacovone, Leonardo T1 - The better you are the stronger it makes you: Evidence on the asymmetric impact of liberalization JF - Journal of Development Economics N2 - This paper studies how liberalization affects productivity growth using micro-level plant data. While previous studies have already shown the existence of a positive relationship between competition and economic performance, the novelty of this paper is that it analyzes not only the average impact of liberalization, but also goes "beyond the average" and shows how the liberalization can affect dissimilar plants in a different way. The author first develops a model which predicts that, while the impact of liberalization on productivity growth is positive "on average", more advanced firms tend to benefit more. In fact, liberalization generates two competing effects: on one side it spurs more innovative efforts because of the increased entry threat by foreign competitors, on the other side, enhanced competition curtails expected profits and reduces the funds available to finance innovative activities. The pro-competitive effect is weaker for less advanced firms as for them it is harder to catch-up with the "technology frontier". These predictions are then tested focusing on Mexican plants during the NAFTA liberalization. The results show that a 1 percent reduction in tariffs spurred productivity growth between 4 and 8 percent on average. However, for backward firms this effect is much weaker if not close to zero, otherwise for more advanced ones this effect is stronger with productivity growing between 11 and 13 percent. Consistent with the theoretical model the results are stronger in those sectors where the scope for innovative activities is more pronounced. These results are particularly important for policy makers because they suggest that while increasing competition may be good in spurring average productivity, it is also true that this effect does not hold for all type of firms, in particular more backward firms may need some complementary support policy to upgrade their capacities and keep up with the more competitive environment. Y1 - 2012 UR - https://openknowledge.worldbank.org/handle/10986/4124 UR - https://doi.org/10.1016/j.jdeveco.2012.06.001 VL - 99 IS - 2 SP - 474 EP - 485 ER - TY - RPRT A1 - Javorcik, Beata A1 - Fitriani, Fitria A1 - Iacovone, Leonardo T1 - Productivity Performance in Indonesia's Manufacturing Sector T2 - Indonesia PREM policy note N2 - Relying on firm-level data from Statistik Industri this note analyzes the evolution of productivity dynamics of Indonesian firms over the past 20 years (1990-2009). Economy-wide and sectoral productivity changes are decomposed into their two main components: changes due to the evolution of average productivity and changes due to 'allocative efficiency'. This decomposition shows that while during the 20 years both components have increased, the changes in allocative efficiency have been mainly driven by average productivity growth and less by increases in allocative efficiency, even if the latter has also improved during the period under analysis. Interestingly, the note shows that both average Total Factor Productivity (TFP) growth and allocative efficiency improvements are especially driven by a few sectors: electronics, machinery and instruments, and textiles, clothing and footwear. Limited improvements in both allocative efficiency and average TFP have occurred instead in natural-resource-based sectors, sectors characterized by more limited competition and higher rents. This note emphasizes the importance of 'allocative efficiency' for productivity evolution because, in a context where firms are very different in their productivity, it becomes crucial how resources are allocated in the economy. This series of policy notes suggests that regulatory reforms, exposure to foreign competition and access to imported intermediate inputs are important determinants of allocative efficiency. The problem of a 'missing middle' is closely related to that of sub-optimal allocation of resources across firms: a strong feature of Indonesian firm-size distribution. Going further, the note suggests that burdensome regulations and imperfect financial markets are two important causes of this missing middle. To complement the focus on productivity, the note also analyzes firm-level job dynamics and points to the crucial role of 'start-ups' and new companies as a key driver of job creation. This finding suggests that the focus of policymakers on Small and Medium Enterprises (SMEs) may be misplaced and that this focus should start realigning towards supporting more dynamic 'start-ups' rather than SMEs. Y1 - 2012 UR - http://documents.worldbank.org/curated/en/485831468044119749/Productivity-performance-in-Indonesias-manufacturing-sector PB - World Bank Group ET - 5 ER - TY - RPRT A1 - Iacovone, Leonardo A1 - Gonzalo, Varela A1 - Aldaz-Carroll, Enrique T1 - Determinants of Market Integration and Price Transmission in Indonesia T2 - Policy Research Working Paper N2 - This paper investigates the determinants of price differences and market integration among Indonesian provinces, using data from retail cooking oil, rice and sugar markets during the period 1993-2007, and from wholesale maize and soybean markets during the period 1992-2006. The authors measure the degree of integration using co-integration techniques, and calculate average price differences. They use regression analysis to understand the drivers of price differences and market integration. For rice and sugar, they find wide market integration and low price differences, in the range of 5-12 percent. For maize, soybeans and cooking oil, they find less integration and higher price differences (16-22 percent). Integration across provinces is explained by the remoteness and quality of transport infrastructure of a province. Price differences across provinces respond to differences in provincial characteristics such as remoteness, transport infrastructure, output of the commodity, land productivity and income per capita. Y1 - 2012 UR - http://hdl.handle.net/10986/9312 PB - World Bank CY - Washington, DC ET - No. 6098 ER - TY - RPRT A1 - Iacovone, Leonardo A1 - Javorcik, Beata Smarzynska T1 - Getting ready: Preparation for exporting T2 - Centre for Economic Policy Research N2 - This study examines developments at the plant-product level preceding an expansion into foreign markets. It relies on very detailed Mexican data for 1994-2004, a period of liberalization in US trade policy vis a vis Mexico, mandated by the North American Free Trade Agreement. Our approach is novel in that we focus on quality, proxied by domestic price premium, of current and future export products. Our findings are consistent with quality upgrading taking place in preparation for entry into export markets. We show that manufacturers who export a particular product variety tend to obtain a price premium for their domestic sales of this variety. Consistently with the hypothesis of quality upgrading before exporting, we find evidence that this premium emerges exactly one year before a variety starts being exported. We find no evidence of upgrading after entering export markets. Our IV estimates suggest that the changes in the price premium are driven by the anticipated cuts in US tariffs and are particularly pronounced among producers exhibiting better performance in the initial period. Y1 - 2012 UR - https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8926 ET - DP8926 ER - TY - RPRT A1 - Iacovone, Leonardo A1 - Pereira-López, Mariana T1 - ICT Adoption and Wage Inequality: Evidence from Mexican Firms T2 - Policy Research working paper N2 - This paper uses a panel of firms from the Mexican Economic Censuses and analyzes at the microeconomic level how labor markets adapt to the adoption of information and communication technologies. The paper studies the effects of the adoption of information and communication technologies over the labor structure of the firm and wages. Thus, it assesses whether increasing the use of information and communication technologies leads to an increasing demand for skilled relative to low-skilled labor, and, thus, analyzes its effects on the wage gap between the two groups. The results of this analysis show that there is indeed an effect of the adoption of information and communication technologies over the demand for higher-skilled workers. However, for the manufacturing and services sectors, instead of increasing the wage gap between skilled and unskilled workers, the wage gap decreases. The results for the manufacturing sector appear to be driven by an increasing sophistication of blue-collar workers due to the organizational adjustments derived from the adoption of information and communication technologies. Y1 - 2018 UR - http://documents.worldbank.org/curated/en/295511515507675734/ICT-adoption-and-wage-inequality-evidence-from-Mexican-firms CY - Washington, D.C. ET - WPS 8298 ER -