Credit Constraints, Technology Choice and Exports: A Firm‐level Study for Latin American Countries. Issue 2 (May 2016)

• Record Type: Journal Article
• Authors: Hasan, Syed; Sheldon, Ian
• Is Part Of: Review of development economics. Volume 20:Issue 2(2016:May)
• Page Start: 547
• Page End: 560
• Publication Date: 2016-05
• Subjects: Economic development -- Periodicals; 330
• DOI: 10.1111/rode.12248
• Languages: English
• ISSNs: 1363-6669

Abstract

Abstract: In this paper, constraints on technology choice and credit access are introduced into a firm‐level trade model in a dynamic setting in order to explain factors that limit benefits to a firm from trade liberalization. Theoretical analysis shows that firms face credit constraints depending on their initial productivity and the cost of credit. As a result, credit‐constrained firms may not be able to cross the minimum productivity threshold needed to enter and compete in a foreign market. Empirical analysis using firm‐level panel data for six Latin American countries confirms that financial constraints negatively influence firms' export and investment decisions.