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Exploring the Long-Term Evolution of Trade Survival

Author

Listed:
  • Hess, Wolfgang

    (Lund University)

  • Persson, Maria

    (Research Institute of Industrial Economics (IFN))

Abstract

Aiming to explore how the survival of trade flows has evolved over time, we analyze a rich data set of detailed imports to individual EU15 countries from 140 non-EU exporters, covering the period 1962–2006. We find that short duration is a persistent characteristic of trade throughout the extended time period that we study: in general only 40 percent of trade flows survive the first year of service, and this share has not changed much since the 1960s. However, this observed constancy is the result of two underlying trends that work in opposite directions. On the one hand, positive trends in several of the observed explanatory variables – which in turn influence the hazard of trade flows dying in a negative direction – imply that the hazard tends to decrease over calendar time. On the other hand, there is also a positive trend in the hazard due to calendar year-specific unobserved factors. Holding all observed determinants constant, the probability of a trade flow dying in its first year increases from 34% at the beginning of the period to 90% at the end.

Suggested Citation

  • Hess, Wolfgang & Persson, Maria, 2011. "Exploring the Long-Term Evolution of Trade Survival," Working Paper Series 880, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0880
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    References listed on IDEAS

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    1. Görg, Holger & Kneller, Richard & Muraközy, Balázs, 2007. "What Makes a Successful Export?," CEPR Discussion Papers 6614, C.E.P.R. Discussion Papers.
    2. Wolfgang Hess & Maria Persson, 2011. "Exploring the duration of EU imports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(4), pages 665-692, November.
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    More about this item

    Keywords

    Duration of Trade; Survival; Entry and Exit; European Union; Discrete-Time Hazard Models;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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