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Over the ROC methodology: Productivity, economic size and firms’ export thresholds
Author(s) -
Costa Stefano,
Sallusti Federico,
Vicarelli Claudio,
Zurlo Davide
Publication year - 2019
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12405
Subject(s) - productivity , economics , order (exchange) , econometrics , measure (data warehouse) , industrial organization , international trade , macroeconomics , computer science , data mining , finance
Abstract We identify the minimum combinations of productivity and “economic size” that Italian manufacturing firms need to achieve in order to access international markets. These “export thresholds” are estimated by applying, for the first time in economics, the ROC (receiver operating characteristics) methodology. In this way, we detect a model‐based (rather than a subjectively determined) cut‐off that allows to identify exporters and nonexporters and provides a measure of each firm’s distance from the export threshold. This methodology also paves the way to investigate other determinants of thresholds, thus helping to design more effective policy interventions to reduce barriers to trade.