Economic performance and international trade engagement: the case of Portuguese manufacturing firms

Abstract

By combining economic and financial data for Portuguese manufacturing firms with data on their exports and imports, we uncover some aspects of the relationship between international trade engagement and firms’ performance. In line with recent theoretical and empirical developments in the international trade literature: (i) we testify that Portuguese international trade is highly concentrated, especially on the import side, and both in inter- and intra-sector terms; (ii) we corroborate previous studies and theses according to which two-way traders outperform only importers, only exporters and above all domestic firms; (iii) we find that the greater the diversification of markets and goods (especially with regard to imports), the better the performance achieved by internationalised firms; (iv) we notice that the higher the intensity of international trade of firms (especially imports), the better the performance of firms; (v) we also present evidence that destination markets, for exports, and, origin markets, for imports, are also important in explaining firm performance.International trade, Firm performance, Diversification