Title: The goliaths

Abstract: Because economies are built of millions of firms and trading relationships, individual companies and export channels should not matter. Yet aggregate shocks do not explain volatility very well. Common shocks (to whole countries or global industries) explain only 45% of the variations. The data show that the picture of trade as millions of links is inaccurate; in fact, flows are extremely concentrated. A widely held view is that trade lowers volatility: exporting to more markets means greater diversification. But more foreign trade exposes economies more to the fortunes of large firms, since they trade disproportionately.

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Publication ID: 171

Category Description: General Issues of International Trade Statistics

Publication Type: Paper

Inistitute: The Economist

Year: 2013

Month: June

Sub Title: The fate of large firms helps explain economic volatility

Author 1: The Economist

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Link: http://www.economist.com/news/finance-and-economics/21579808-fate-large-firms-helps-explain-economic-volatility-goliaths

Tags: firm-level data , world trade ,

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