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Entrepreneurship and aggregate merchandise trade growth in New Zealand

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  • Richard Fabling

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  • Lynda Sanderson

Abstract

We present a descriptive analysis of firm-level merchandise trade, focussing on the role of entrepreneurial exporting behaviour. We document two aspects of the dynamics of trade – the contribution of novel export activity to aggregate trade growth and, conversely, the substantial exit rates of new trade relationships. The unique contribution of this paper lies in the detailed and comprehensive data we have available on market and product choices. Specifically, we make use of shipment-level goods trade data, linked to information for the universe of economically active New Zealand manufacturers,to examine trade at the firm-level and at the product-country-firm nexus. Our growth decomposition and survival analysis suggest several themes: (a) novel market entry is a significant contributor to aggregate export growth; (b) the study of international entrepreneurial behaviour should encompass not just de novo entrants, but the broad range of trade innovations initiated by incumbent exporters; (c) much expansion in trade appears to be incremental in nature; (d) despite this, such innovations appear to be inherently risky; and (e) experience and scale appear to be key factors in overcoming these risks (or at least proxies for such factors).

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File URL: http://hdl.handle.net/10.1007/s10843-010-0063-9
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Bibliographic Info

Article provided by Springer in its journal Journal of International Entrepreneurship.

Volume (Year): 8 (2010)
Issue (Month): 2 (June)
Pages: 182-199

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Handle: RePEc:kap:jinten:v:8:y:2010:i:2:p:182-199

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Web page: http://www.springerlink.com/link.asp?id=112039

Related research

Keywords: Trade growth; Sunk costs; Innovation;

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References

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  1. Richard Fabling & Lynda Sanderson, 2009. "Entrepreneurship and aggregate merchandise trade growth in New Zealand," Reserve Bank of New Zealand Discussion Paper Series DP2009/09, Reserve Bank of New Zealand.
  2. Geoff Simmons, 2002. "Growing Pains: New Zealand Qualitative Evidence on Hurdles to Exporting Growth," Treasury Working Paper Series 02/10, New Zealand Treasury.
  3. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "learning-by-exporting" important? Micro-dynamic evidence from Colombia, Mexico and Morocco," Finance and Economics Discussion Series 96-30, Board of Governors of the Federal Reserve System (U.S.).
  4. Richard Fabling & Arthur Grimes, 2008. "Over the hedge? Exporters' optimal and selective hedging choices," Reserve Bank of New Zealand Discussion Paper Series DP2008/14, Reserve Bank of New Zealand.
  5. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages F134-F161, 02.
  6. John M. Abowd & Robert H. Creecy & Francis Kramarz, 2002. "Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee Data," Longitudinal Employer-Household Dynamics Technical Papers 2002-06, Center for Economic Studies, U.S. Census Bureau.
  7. Fabling, Richard, 2007. "Just How Innovative are New Zealand Firms? Quantifying & Relating Organisational and Marketing Innovation to Traditional Science & Technology Indicators," Occasional Papers 07/4, Ministry of Economic Development, New Zealand.
  8. Richard Fabling & Arthur Grimes & Lynda Sanderson, 2012. "Whatever next? Export market choices of New Zealand firms," Papers in Regional Science, Wiley Blackwell, vol. 91(1), pages 137-159, 03.
  9. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September.
  10. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 430-447, May.
  11. Andrew B. Bernard & J. Bradford Jensen, 2004. "Why Some Firms Export," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 561-569, May.
  12. Fabling, Richard & Sanderson, Lynda, 2008. "Firm Level Patterns in Merchandise Trade," Occasional Papers 08/3, Ministry of Economic Development, New Zealand.
  13. Vivienne Shaw & Jenny Darroch, 2004. "Barriers to Internationalisation: A Study of Entrepreneurial New Ventures in New Zealand," Journal of International Entrepreneurship, Springer, vol. 2(4), pages 327-343, December.
  14. Besedes, Tibor & Prusa, Thomas J., 2006. "Product differentiation and duration of US import trade," Journal of International Economics, Elsevier, vol. 70(2), pages 339-358, December.
  15. Leonidas C Leonidou & Constatine S Katsikeas, 1996. "The Export Development Process: An Integrative Review of Empirical Models," Journal of International Business Studies, Palgrave Macmillan, vol. 27(3), pages 517-551, September.
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Citations

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Cited by:
  1. 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.
  2. Richard Fabling & Arthur Grimes & Lynda Sanderson, 2009. "Whatever next? Export market choices of New Zealand firms," Reserve Bank of New Zealand Discussion Paper Series DP2009/19, Reserve Bank of New Zealand.
  3. 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.
  4. Richard Fabling & Arthur Grimes, 2014. "Over the Hedge: Do Exporters Practice Selective Hedging?," Working Papers 14_01, Motu Economic and Public Policy Research.
  5. Richard Fabling & Lynda Sanderson, 2013. "Export Performance, Invoice Currency, and Heterogeneous Exchange Rate Pass-Through," Working Papers 13_01, Motu Economic and Public Policy Research.
  6. Fabling, Richard & Sanderson, Lynda, 2013. "Exporting and firm performance: Market entry, investment and expansion," Journal of International Economics, Elsevier, vol. 89(2), pages 422-431.

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