The demolition of tariff barriers in manufacturing industries promises rich pickings across the world for new ventures - but are entrepreneurs actually taking up the challenge by launching firms to tap into international markets?
Globalization offers manufacturers undeniable opportunities by putting established players under competitive pressure while providing new prospects in international markets.
Yet while opening markets up to foreign competition may fuel growing trade in industrialized countries, are their entrepreneurs picking up the gauntlet?
A new study by Italo Colantone and Leo Sleuwaegen, finds increasing openness to trade in globalizing European industries may, in fact, be limiting the creation of new companies, at least in the short run.
The study, “International Trade, Exit and Entry: A Cross-Country and Industry Analysis”, shows that only sectors immersed in intra-industry trade and sourcing inputs internationally are likely to sidestep these constraints.
Colantone and Sleuwaegen provide novel insights into how the comparative advantages of countries operate as economic activities are reallocated in the global economy, and their conclusions have important implications for managers and policymakers.
Published on 20/04/2011
