Market Expansion and Productivity Growth: Do New Domestic Markets Matter as Much as New International Markets?

Abstract

This paper asks how market expansion contributes to productivity growth. It investigates whether entry to both new international markets and new domestic markets is associated with greater productivity growth. It also examines whether exit from export markets is necessarily associated with deteriorating performance or whether it too can lead to success if associated with movements to new markets. Finally, the paper drills down into the strategic stance of firms that move to new markets to examine the strategic differences that set them apart from their compatriots that do not find themselves able to adapt. © Her Majesty the Queen in Right of Canada 2012.