Scandinavian Working Papers in Economics

Nationaløkonomisk tidsskrift,
Nationaløkonomisk Forening

Small Open Economy Firms in International Trade: Evidence from Danish Transactions-Level Data

2009, Volume 2009, issue 1, pp. 173-192

Tor Eriksson (), Valérie Smeets () and Frédéric Warzynski ()
Additional contact information
Tor Eriksson: Aarhus School of Business, Aarhus University,, Postal: Fuglesangs Allé 4, 8210 Aarhus, Danmark
Valérie Smeets: Aarhus School of Business, Aarhus University,, Postal: Fuglesangs Allé 4, 8210 Aarhus, Danmark
Frédéric Warzynski: Aarhus School of Business, Aarhus University,, Postal: Fuglesangs Allé 4, 8210 Aarhus, Danmark

Abstract: In this paper we use a rich dataset which contains disaggregated imports and exports decisions by product and origin/destination for all Danish companies for the period 1993-2003, to provide key elements in characterizing Danish firms in international trade. Most evidence to date emanates from the U.S. or developing economies such as Columbia or Mexico. Using these studies as benchmarks, we find some similarities but also differences which we believe are representative of European-type, small open economies. We find that Danish exporters make up a fairly small fraction of the total of firms, but that this fraction is higher than in, e.g., the U.S. Firms engaged in exporting have the same positive performance characteristics found in previous studies, ie, size, capital and skilled labour intensity, labour as well as total factor productivity, and wages. But most exporter premia are significantly larger in Denmark than in the U.S. Finally, we find that trade is positively related to productivity of firms. The association between productivity and the firm’s imports of intermediate goods is particular strong.

Keywords: small open economies; export; import; international trade

JEL-codes: A10

Language: English

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