Financial Dependence and International Trade
نویسندگان
چکیده
Colin Xu, two anonymous referees and seminar participants at the University of Virginia, the World Bank, the University of California at Davis and the Annual Meeting of the Southern Economic Association are gratefully acknowledged. The usual disclaimer applies. The findings, interpretations and conclusions in this paper are entirely those of the author and do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Does financial development translate into a comparative advantage in industries that use more external finance? We use industry-level data on firms' dependence on external finance for 36 industries and 56 countries to examine this question. We show that countries with better-developed financial systems have higher export shares and trade balances in industries that use more external finance. These results are robust to the use of alternative measures of external dependence and financial development and are not due to reverse causality or simultaneity bias.
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