ABSTRACT
The recent literature on heterogeneous firms in international trade provides theoretical justification and empirical evidence that globally engaged firms, that is multinational enterprises (MNEs) and exporters, differ from purely domestic firms in terms of size, productivity, human and capital intensity and wages. It is also well-established that the best firms become outward investors, less equipped firms become exporters and the least equipped firms remain in the domestic market. In particular, evidence has shown that domestic MNEs outperform exporters (Greenaway and Kneller, 2007) and are more similar to foreign MNEs (Criscuolo and Martin, 2009), while exporters are more productive than purely domestic firms (Wagner, 2007).
