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The determinants of trade survival

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Abstract

The aim of this paper is to explore the patterns of trade duration across regions and to identify its determinants. Using an extended Cox model, we evaluate the effects of country and product characteristics, as well as of trade cost variables on the duration of trade relationships from 96 countries from 1995 to 2004. Our results suggest first that the duration of trade relationships increases with the region level of development: trade relationships from richer economies face lower hazard rates i.e. longer duration. Second, the type of product matters for export survival, trade relationships involving differentiated products show a hazard rate that is 11% to 13% lower than trade relationships involving homogeneous goods. Third, high export costs increase the probability of export failure in all regions but the effect diminishes with time, thus suggesting that export experience matters. Finally, the size of exports also matters: the larger the transaction, the higher the probability of survival.

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File URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP05-2009.pdf
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Bibliographic Info

Paper provided by Economics Section, The Graduate Institute of International Studies in its series IHEID Working Papers with number 05-2009.

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Length: 36
Date of creation: Jun 2009
Date of revision: Jun 2009
Handle: RePEc:gii:giihei:heidwp05-2009

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Related research

Keywords: Duration; Trade; Fixed Costs;

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References

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  1. Felbermayr, Gabriel, 2006. "Exploring the Intensive and Extensive Margins of World Trade," Munich Reprints in Economics 20646, University of Munich, Department of Economics.
  2. Volker Nitsch, 2007. "Die Another Day: Duration in German Import Trade," CESifo Working Paper Series 2085, CESifo Group Munich.
  3. Brenton, Paul & Newfarmer, Richard, 2007. "Watching more than the Discovery channel : export cycles and diversification in development," Policy Research Working Paper Series 4302, The World Bank.
  4. Wood, Adrian & Mayer, Jorg, 2001. "Africa's Export Structure in a Comparative Perspective," Cambridge Journal of Economics, Oxford University Press, vol. 25(3), pages 369-94, May.
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Citations

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Cited by:
  1. Hess, Wolfgang & Persson, Maria, 2010. "The Duration of Trade Revisited. Continuous-Time vs. Discrete-Time Hazards," Working Papers 2010:1, Lund University, Department of Economics.
  2. Hess, Wolfgang & Persson, Maria, 2010. "Exploring the Duration of EU Imports," Working Paper Series 849, Research Institute of Industrial Economics.
  3. Alessandro Nicita & Miho Shirotori & Bolormaa Tumurchudur Klok, 2013. "Survival Analysis Of The Exports Of Least Developed Countries: The Role Of Comparative Advantage," UNCTAD Blue Series Papers 54, United Nations Conference on Trade and Development.
  4. Cadot, Olivier & Iacovone, Leonardo & Pierola, Denisse & Rauch, Ferdinand, 2011. "Success and failure of African exporters," Policy Research Working Paper Series 5657, The World Bank.
  5. Hess , Wolfgang & Persson, Maria, 2011. "Exploring the Long-Term Evolution of Trade Survival," Working Paper Series 880, Research Institute of Industrial Economics.
  6. Marco Fugazza & Alain McLaren, 2013. "Market Access, Export Performance And Survival: Evidence From Peruvian Firms," UNCTAD Blue Series Papers 58, United Nations Conference on Trade and Development.
  7. Céline CARRERE & Vanessa STRAUSS-KAHN, 2012. "Exports Dynamics: Raising Developing Countries Exports Survival through Experience," Working Papers P35-A, FERDI.
  8. Arjan Lejour, 2013. "The duration of Dutch export relations: decomposing firm, country and product characteristics," CPB Discussion Paper 258, CPB Netherlands Bureau for Economic Policy Analysis.
  9. Wolfgang Hess & Maria Persson, 2012. "The duration of trade revisited," Empirical Economics, Springer, vol. 43(3), pages 1083-1107, December.
  10. Persson, Maria & Gullstrand, Joakim, 2013. "How to Combine High Sunk Costs of Exporting and Low Export Survival," Working Paper Series 962, Research Institute of Industrial Economics.
  11. Marco Fugazza & Ana Cristina Molina, 2011. "On The Determinants Of Exports Survival," UNCTAD Blue Series Papers 46, United Nations Conference on Trade and Development.

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