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Exploring the Duration of EU Imports

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Author Info

  • Hess, Wolfgang

    () (Lund Unversity)

  • Persson, Maria

    () (Research Institute of Industrial Economics (IFN))

Abstract

The objective of this paper is twofold. First, against the background of an existing empirical literature on the duration of trade which has found that international trade is often of strikingly short duration, we aim to establish whether or not EU imports from the rest of the world also are short-lived. Second, since there is at this point no clear commonly accepted theoretical explanation for these short trade durations, we seek to provide a thorough empirical description and analysis of the phenomenon, with the intention of thereby facilitating theoretical developments on the subject. We employ a rich data set of detailed imports to the EU15 countries from 140 exporters, covering the time period 1962-2006. Using these data, we begin by conducting a thorough descriptive analysis of the duration of EU imports. Thereafter, we perform a regression analysis using discrete-time duration models with proper controls for unobserved heterogeneity. We draw the conclusion that EU imports are indeed very short-lived – in fact, possibly more so than, for example, US imports. The median duration of EU imports is for example merely one year, and almost 60 percent of all spells cease during the first year of service. Among our empirical findings are (i) that the duration of trade remains stable across the long time period that we study; (ii) that short trade durations are the result of at least two processes: countries shifting between different suppliers but continuing to import a given product, and countries ceasing to import the product altogether; and (iii) that countries with a diversified export structure also will tend to have more long-lived export flows. In our formal regression, we are also able to find a set of explanatory variables that have statistically significant effects on the probability that trade flows die.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 849.

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Length: 29 pages
Date of creation: 24 Aug 2010
Date of revision:
Publication status: Forthcoming as Hess, Wolfgang and Maria Persson, 'Exploring the Duration of EU Imports' in Review of World Economics.
Handle: RePEc:hhs:iuiwop:0849

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Keywords: Duration of Trade; Survival; European Union; Discrete-Time Hazard Models;

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References

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Citations

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Cited by:
  1. Florian MAYNERIS & Sandra PONCET, 2011. "Entry on difficult export markets by Chinese domestic firms: the role of foreign export spillovers," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2011041, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  2. Hess , Wolfgang & Persson, Maria, 2011. "Exploring the Long-Term Evolution of Trade Survival," Working Paper Series 880, Research Institute of Industrial Economics.
  3. Fernandes, Ana M. & Paunov, Caroline, 2012. "The risks of innovation : are innovating firms less likely to die ?," Policy Research Working Paper Series 6103, The World Bank.
  4. Stirbat, Liviu & Record, Richard & Nghardsaysone, Konesawang, 2013. "Determinants of export survival in the Lao PDR," Policy Research Working Paper Series 6301, The World Bank.
  5. Besedes, Tibor, 2011. "The role of NAFTA and returns to scale in export duration," MPRA Paper 31217, University Library of Munich, Germany.
  6. Rudi, Jeta & Grant, Jason H. & Peterson, Everett B., 2012. "Survival of the Fittest: Explaining Export Duration and Export Failure in the U.S. Fresh Fruit and Vegetable Market," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124706, Agricultural and Applied Economics Association.

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