Trade in intermediate inputs raises firm productivity as it enables producers to access both better and novel inputs of production. The question is: by how much? This paper develops a framework to answer this question. We explicitly allow for (i) firms sourcing from multiple countries, (ii)...

As recently shown by Hsieh and Klenow (2012), firm dynamics differ substantially across countries. While firms in the US experience substantial growth during their life-cycle, firms in developing countries, especially in India, barely expand. We present a tractable microfounded endogenous growth...