Trade and Growth: Reconciling the Macroeconomic and Microeconomic Evidence

Abstract. Many empirical studies based on plant‐level data have found that firms that enter the export markets are more productive than non‐exporters and that this difference in productivity is achieved before firms become involved in exporting. These findings have challenged the traditional view that openness to trade increases productivity and economic growth. This article reconsiders the literature on trade, growth, and trade policies and argues that a careful examination of these new findings is consistent with the idea that exporting increases productivity and economic growth.