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Diversification, Networks and the Survival of Exporting Firms

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  • Jorge Tovar

    ()

  • Luis Roberto Martínez

    ()

Abstract

There is abundant empirical evidence testing models where comparative advantage arises from firm heterogeneity. As of today it is relatively clear who exports and why a firm decides to export. But, what determines the survival of a firm in the export market? This paper exploits a detailed developing economy monthly firm-level dataset for the period 2001 - 2008 in order to explore the importance of trade networks and product and market diversification on the survival of exporting firms.We find that market diversification prevails over product diversification while tradenetwork effects, measured in various ways, are highly correlated to the survival of new exporting firms. From a policy perspective our findings suggest that government aid in the exporting process should focus on expanding into new markets, not on promoting new export products.

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File URL: http://economia.uniandes.edu.co/publicaciones/dcede2011-08.pdf
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Bibliographic Info

Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 008733.

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Length: 46
Date of creation: 06 Mar 2011
Date of revision:
Handle: RePEc:col:000089:008733

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Keywords: Firm dynamics; product diversification; market diversification; survival; trade networks.;

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References

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  1. Arnaud Costinot & Andres Rodriguez-Clare & Costas Arkolakis, 2010. "New Trade Models, Same Old Gains?," 2010 Meeting Papers 433, Society for Economic Dynamics.
  2. Rubén Segura-Cayuela & Josep M. Vilarrubia, 2008. "Uncertainty and entry into export markets," Banco de Espa�a Working Papers 0811, Banco de Espa�a.
  3. Volpe Martincus, Christian & Carballo, Jerónimo, 2010. "Beyond the average effects: The distributional impacts of export promotion programs in developing countries," Journal of Development Economics, Elsevier, vol. 92(2), pages 201-214, July.
  4. Volpe Martincus, Christian & Carballo, Jerónimo, 2008. "Is export promotion effective in developing countries? Firm-level evidence on the intensive and the extensive margins of exports," Journal of International Economics, Elsevier, vol. 76(1), pages 89-106, September.
  5. Christian Volpe Martincus & Jerónimo Carballo, 2008. "Survival of New Exporters in Developing Countries: Does it Matter How They Diversify?," IDB Publications 9291, Inter-American Development Bank.
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Cited by:
  1. Stirbat, Liviu & Record, Richard & Nghardsaysone, Konesawang, 2013. "Determinants of export survival in the Lao PDR," Policy Research Working Paper Series 6301, The World Bank.
  2. Marco Fugazza & Alain McLaren, 2013. "Market Access, Export performance and Survival: Evidence from Peruvian Firms," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 13021, Institut d'Economie et Econométrie, Université de Genève.
  3. Gullstrand, Joakim & Persson, Maria, 2012. "How to Combine High Sunk Costs of Exporting and Low Export Survival," Working Papers 2012:32, Lund University, Department of Economics.

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