This article reviews the recent theoretical literature on heterogeneous firms and trade, which emphasizes firm selection into international markets and reallocations of resources across firms. We discuss the empirical challenges that motivated this research and its relationship to traditional...

This article reviews the empirical evidence on firm heterogeneity in international trade. A first wave of empirical findings from microdata on plants and firms proposed challenges for existing models of international trade and inspired the development of new theories emphasizing firm...