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Whatever next? Export market choices of New Zealand firms

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  • Richard Fabling
  • Arthur Grimes
  • Lynda Sanderson

Abstract

We examine product and market entry choices of New Zealand exporters, using an enterprise level dataset which links firm performance measures with detailed data on merchandise trade. We focus our enquiry not on the broad question of what determines a firm's ability to export, but on the subsequent question: given that a firm has the ability to export, what determines the choices they make about what and where to export? We simultaneously consider firm and market level determinants of export market entry. At the firm level we find that measures of general and specific prior trade experience play an important role in determining the firm's future export activities. That is, we find evidence of path dependence within firms. We also find evidence of path dependence across firms, with entry into new export relationships reflecting demonstration effects from the export activities of other firms in the local area. In particular, firms which are located in New Zealand regions with high shares of employment in incumbent exporters to a specific country will have a probability of entering a new relationship involving that country that is 116 percent higher than those in regions with low incumbent employment shares. These results are robust to the inclusion of other determinants of exporting, including the macroeconomic performance of destination countries, exchange rate movements, and the past performance of the exporting firm.

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File URL: http://hdl.handle.net/10.1111/j.1435-5957.2011.00380.x
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Bibliographic Info

Article provided by Wiley Blackwell in its journal Papers in Regional Science.

Volume (Year): 91 (2012)
Issue (Month): 1 (03)
Pages: 137-159

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Handle: RePEc:bla:presci:v:91:y:2012:i:1:p:137-159

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1056-8190

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  1. Aitken, B. & Hanson, G.H. & Harrison, A.E., 1994. "Spillovers, Foreign Investment and Export Behavior," Papers 95-06, Columbia - Graduate School of Business.
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Citations

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Cited by:
  1. Martina Lawless, 2013. "Marginal Distance: Does Export Experience Reduce Firm Trade Costs?," Open Economies Review, Springer, vol. 24(5), pages 819-841, November.
  2. João Amador & Luca Opromolla, 2013. "Product and destination mix in export markets," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 149(1), pages 23-53, March.
  3. Enzo Cassino & David Oxley, 2013. "How Does the Exchange Rate Affect the Real Economy? A Literature Survey," Treasury Working Paper Series 13/26, New Zealand Treasury.
  4. Philip R. Lane, 2013. "External imbalances and macroeconomic policy," New Zealand Economic Papers, Taylor & Francis Journals, vol. 47(1), pages 53-70, April.
  5. Cebeci, Tolga & Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2012. "Exporter dynamics database," Policy Research Working Paper Series 6229, The World Bank.
  6. Richard Fabling & Lynda Sanderson, 2010. "Entrepreneurship and aggregate merchandise trade growth in New Zealand," Journal of International Entrepreneurship, Springer, vol. 8(2), pages 182-199, June.
  7. Cebeci, Tolga & Fernandes, Ana M., 2013. "Micro dynamics of Turkey's export boom in the 2000s," Policy Research Working Paper Series 6452, The World Bank.
  8. Procter, Roger, 2011. "Echanching Productivity: Towards an Updated Action Agenda," Occasional Papers 11/1, Ministry of Economic Development, New Zealand.
  9. Philip R. Lane, 2011. "External Imbalances and Macroeconomic Policy in New Zealand," The Institute for International Integration Studies Discussion Paper Series iiisdp376, IIIS.
  10. Richard Fabling & Arthur Grimes, 2014. "Over the Hedge: Do Exporters Practice Selective Hedging?," Working Papers 14_01, Motu Economic and Public Policy Research.
  11. Darian Woods & Andrew Coleman, 2012. "Price, Quality, and International Agricultural Trade," Working Papers 12_08, Motu Economic and Public Policy Research.

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