New paper on the spillover effects of trade

In September, the new paper of Márta Bisztray, Miklós Koren and Ádám Szeidl was published in the Journal of International Economics. In this article, they investigate the spillover effect of knowledge between Hungarian importing firms. In particular, they seek to explain how neighbors’ or connected firms’ country-specific import experience help others to enter into a new import market. Results show that the probability of importing from a country doubles if at least one of the firm’s neighbors or the previous firms of its manager already imports from that country. This effect is stronger for big and more productive firms. With the help of a simple model they also show that the effects of an import-encouragement policy will be significantly higher if it targets firms with many and productive neighbors. The results of the paper confirm that firm clusters play a big role in facilitating the diffusion of business practices. The whole paper can be read here