Export Market Diversification and Productivity Improvements: Theory and Evidence From Argentinean Firms

Paulo Santos Monteiro, Luciana Juvenal

Research output: Working paperDiscussion paper


This paper examines the relationship between trade and investment in technology
adoption when firms face demand uncertainty. Our model predicts that, for a given
overall market size, exporting to several countries reduces firms’ demand uncertainty and, hence, raises incentives to invest in productivity improvements. The effects of diversification are heterogeneous across firms: An additional foreign market matters more for firms exporting to fewer destinations. We test the proposed theory using a large sample of Argentinean manufacturing exporters. The predictions of the model find strong support in the data.
Original languageEnglish
Publication statusUnpublished - Apr 2013

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