This paper examines the relationship between firms’ productivity improvement and the volume of exports, and shows that it can be sometimes negative, which seems to be an empirical puzzle. The key lies in that we simultaneously take into account intermediate retailers (i.e. vertically) and...

This paper constructs a dynamic scale-free North-South model of trade with endogenous innovation. In the North a local-sourcing-targeted race and an outsourcing-targeted R&D race take place simultaneously within each industry. The former results in the winner firm manufacturing in the North,...