International Trade and Foreign Direct Investment for Sustainable Development

Dear colleagues,

The last two decades have seen a renewed interest in the theory of international trade and open economy macroeconomics. For many years, the concept of comparative advantage and simple two-country models were used to identify industries in which one country was relatively stronger than another country and to study the resulting patterns of specialization and trade. However, in recent years this view was challenged by the analysis of large firm-level datasets that revealed large differences among firms within the same industry in terms of their productivity and export performance. Contemporary research increasingly focuses on individual firms, plants, and products rather than on countries and industries. The firm-level evidence shows several new facts that were not previously observable at the aggregate level.

In particular, the evolution of aggregate trade is driven by two “margins”: the “intensive margin” that refers to average exports per firm and the “extensive margin” that refers to the number of exporting firms, the number of exported products, and the number of export destinations. The empirical evidence shows that the variation in aggregate trade between countries is mostly driven by the extensive margin. The exporting firms differ from non-exporting firms in a number of ways. They are bigger, generate higher added value, pay higher wages, employ relatively more skilled workers and more capital per worker, and their productivity levels are higher. These findings also have important trade policy implications. Trade liberalization leads to market share reallocations towards more productive firms and raises average industry productivity, as low-productivity firms exit and high-productivity firms expand their operations. The evidence shows that the opening of distant markets gives an additional opportunity only to the most productive firms within each industry, allowing them to enlarge their market shares to the detriment of less-productive competitors, some of which might be forced to exit the market or shut down. These facts have been explained by recent theoretical studies based on multi-country models. However, these models differ in terms of the features that cause only the most productive firms to export, and many issues still remain unresolved.

The main aim of this Special Issue will be to bring together a group of researchers who are doing original and interesting research on this important topic. Researchers will be invited to submit both theoretical and empirical contributions. In particular, we welcome papers related to the following topics:

1. Theoretical and empirical research about firm-level or product-level trade;
2. The impact of trade liberalization and competition on firm productivity and trade;
3. “Extensive” and “intensive” margins of trade;
4. Survival and duration of trade relationships;
5. Learning-by-exporting;
6. Trade, innovation, and productivity spillovers;
7. Trade, migration, and worker heterogeneity;
8. Trade, foreign direct investment, and environment.

Prof. Andrzej Cieslik
Prof. Michael Ryan
Guest Editors

Manuscript Submission Information

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Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

• international economics
• international trade
• foreign direct investment
• open economy macroeconomics
• economic geography