Soluciones propuestas para resolver el problema geométrico

Perhaps the most striking fact about international trade, one which has motivated the current generation of research on the topic, is that at the firm level, “engaging in international trade is an exceedingly rare activity”; in the United States, for instance, only 4% of the 5.5 million firms operating in the year 2000 engaged export markets (Bernard et al 2007, 105). This is because entering export markets entails high fixed costs that most firms (even those in

comparative advantage sectors) cannot bear; they therefore remain domestic firms that produce solely for the national market. However, a small handful of firms (in both comparative advantage and comparative disadvantage industries) are able—due to their relatively high productivity levels— to bear the fixed costs of international market entry, and therefore engage in exporting and multinational production. This has been the central insight in the international economics literature on firm heterogeneity, which is colloquially known as the “new new trade theory” (Bernard et al 2012). The first wave of the literature on firm heterogeneity emphasized the productivity differences between exporters and non-exporters, and how trade liberalization leads

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to the redistribution of income between firms on different ends of the productivity spectrum; Plouffe (2012; 2017) and Kim (2017) draw out important political implications of this process, showing that relatively productive firms tend to favor globalization and trade liberalization, while less productive firms seek import protection.

More recent work in the firm heterogeneity literature has underscored not only the distinctions between internationally engaged firms and domestic ones, but distinctions among internationally engaged firms. That is, even among the set of internationally engaged firms, internationalized activity is highly concentrated among a small number of especially large and productive “superstar” firms. Bernard et al (2007) note, for instance, that among the United States’s relatively small number of exporters in the year 2000, “the top 10 percent accounted for 96% of total US exports” (Bernard et al 2007, 105). In other words, out of 220,000 trading firms in the US at this time (4% of 5.5 million), only 22,000 firms accounted for 96% of the exporting activity. Nor is this remarkable skew in international engagement a developed world

phenomenon. For instance, Freund and Pierola (2015) show that in a large sample of developing countries from 2006-2008, the “top one percent of exporters [accounted] for 53% of exports” while the “top five percent of firms [accounted] for almost 80 percent of exports on average” (2). In short, the high degree of concentration of internationalized activity amongst a small number of superstar firms is a robust result, and has been documented in a number of studies across

different national contexts (see, for instance, Mayer and Ottaviano 2008; Bernard, Van Beveren, and Vandenbussche 2014; Muuls and Pisu 2009).

Not surprisingly, these superstar firms disproportionately benefit from globalization and market liberalization. In their study of preferential trade agreements, for instance, Baccini, Pinto, and Weymouth (2017) use a firm-level dataset of US multinationals to convincingly document

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that the “largest and most productive firms disproportionately reap the benefits of

liberalization…even among MNCs [multinational corporations], the most competitive economic actors in the world economy” (379). This skewed distribution of benefits from globalization at the firm level arises through what might be considered a “product market channel” and a “factor market channel” (Melitz 2003, 1715-1716).2 _{The product market channel works through “the}

increase in product market competition associated with trade: firms face an increasing number of competitors; furthermore the new foreign competitors, on average, are more productive than the domestic firms” (Melitz 2003, 1716). In other words, liberalization leads to increased import competition, which puts downward pressure on firm profits. The factor market channel works through the impact of liberalization on the labor market: “trade induces increased competition for scarce labor resources as real wages are bid up by the relatively more productive firms who expand production to serve the export markets” (Melitz and Ottaviano 2008, 307). Together, these forces induce low-productivity firms to either contract, or exit the market entirely, since low-productivity firms have difficulty withstanding the increased competition and increased costs associated with globalization as it works through these product and factor market channels. On the other hand, “since the largest and most productive firms can afford to charge lower prices and can absorb higher wages, they expand sales to liberalizing countries at the expense of

smaller less-productive firms” (Baccini, Pinto, and Weymouth 2017, 379). In short, the labor- market and competitive effects of liberalization force firms below the productivity threshold for international engagement into decline, and eliminate the lowest productivity firms from the market altogether.

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Melitz 2003 considers the factor market channel, while Melitz and Ottaviano 2008 considers the product market channel

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To be sure, it is worth noting that liberalization in period t lowers the productivity threshold required for exporting relative to the previous time period, t-1; liberalization therefore makes it possible for firms previously just below the productivity threshold to enter export markets. However, these “marginal exporter” firms are not “winners” of liberalization to the same extent as superstars. Osgood et al (2017) note, for instance, that in the wake of

liberalization, a “marginal exporter who just barely earns a positive profit from exporting” benefits from expanded foreign market access, but must also confront increased competition from expanded imports (136); on the other hand, while superstars “also face increased import competition, their lower costs enable them to absorb these changes with relative ease” (Plouffe 2017, 5). In other words, superstars are less sensitive to the (profit-reducing) competition and factor market effects of liberalization than marginal exporters, precisely because they are so much more productive than these marginal exporters. The upshot is that the “biggest winners from globalization may be a relatively small group of large high-volume exporters”, i.e. superstars (Osgood et al 2017, 136).

In the next section (2.3) I consider how the distinctive information and skill-intensive tasks that superstar firms must carry out in order to engage global markets give rise to distinctive firm and plant-level location patterns that ultimately (when scaled up) manifest as the broader territorial formations that we call global cities and hinterlands.

2.3 Globalization and the Emergence of Global Cities and