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Abstract
Credit constraints could impose important barriers against firm’s value added exports. Theoretically, my model which incorporates borrowing constraint into exporting firm’s profit maximization problem predicts credit constraints reduces firm export and export intensity. Using data on 66 economies from 1995-2018, I find evidence that the effect of credit constraint vary across industries that have differing levels of external financing and asset tangibility. For exporting countries with more developed financial systems, industries that rely more heavily on external financing experience larger boosts in exports. On the other hand, financially less developed countries export less in industries with fewer collateralizable assets. The effect is more ambiguous when examining export intensity. Overall, I provide evidence that credit constraint constitutes a significant barrier for global value chain participation.