| Content | Theoretic and empirical studies argue that the di erences in nancial mar-
ket development contribute to varying export levels in international trade. We
illustrate this idea by studying a heterogeneous rm model expanded to in-
clude a borrowing constraint, and we nd that in a developed nancial system
a change in interest rate exerts a signi cant e ect on exports, due to the high
dependence on external nancing. Conversely, in less developed nancial sys-
tems, where producers typically have to rely on internally generated capital,
changes in the interest rate do not generate a signi cant e ect on export levels. |
