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On the Duration of Trade

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  • Tibor Besedes
  • Thomas J. Prusa

Abstract

This paper employs survival analysis to study the duration of US imports. We find that the median duration of exporting a product to the US is very short, on the order to two to four years. Our results also indicate that there is negative duration dependence meaning that if a country is able to survive in the exporting market for the first few years it will face a very small probability of failure and will export the product for a long period of time. This result holds across countries and industries. We find that our results are not only robust to aggregation but are strengthened by aggregation. That is, as we aggregate from product level trade data to SITC industry level trade data the estimated survival increases. We rank countries by their survival experience and show that our rankings are strongly correlated with the rankings in Feenstra and Rose (2002), implying that product cycle followers also experience particularly short duration.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9936.

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Date of creation: Sep 2003
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Publication status: published as Besedes, Tibor and Thomas J. Prusa. "Ins, Outs, And The Duration Of Trade," Canadian Journal of Economics, 2006, v39(1,Feb), 266-295.
Handle: RePEc:nbr:nberwo:9936

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  1. Robert C. Feenstra & Andrew K. Rose, 2000. "Putting Things In Order: Trade Dynamics And Product Cycles," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 369-382, August.
  2. Proudman, James & Redding, Stephen J, 1998. "Persistence and Mobility in International Trade," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1802, C.E.P.R. Discussion Papers.
  3. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-79, June.
  4. Pakes, A. & Ericson, R., 1990. "Empirical Implications Of Alternative Models Of Firm Dynamics," Papers, Yale - Economic Growth Center 594, Yale - Economic Growth Center.
  5. Redding, Stephen, 2002. "Specialization dynamics," Journal of International Economics, Elsevier, Elsevier, vol. 58(2), pages 299-334, December.
  6. Gagnon, Joseph E & Rose, Andrew K, 1995. "Dynamic Persistence of Industry Trade Balances: How Pervasive Is the Product Cycle?," Oxford Economic Papers, Oxford University Press, vol. 47(2), pages 229-48, April.
  7. James E. Rauch, 1996. "Networks versus Markets in International Trade," NBER Working Papers 5617, National Bureau of Economic Research, Inc.
  8. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, Elsevier, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517 Elsevier.
  9. Peter K. Schott, 2001. "Do Countries Specialize?," Yale School of Management Working Papers, Yale School of Management ysm173, Yale School of Management.
  10. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, Econometric Society, vol. 50(3), pages 649-70, May.
  11. Marcus Asplund & Volker Nocke, 2003. "Firm Turnover in Imperfectly Competitive Markets," PIER Working Paper Archive 03-010, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
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Cited by:
  1. Debaere, Peter & Mostashari, Shalah, 2010. "Do tariffs matter for the extensive margin of international trade? An empirical analysis," Journal of International Economics, Elsevier, Elsevier, vol. 81(2), pages 163-169, July.
  2. Ana Fernandes & Heiwai Tang, 2012. "Learning from Neighbors' Export Activities: Evidence from Exporters' Survival," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0766, Department of Economics, Tufts University.
  3. Besedes, Tibor, 2011. "The role of NAFTA and returns to scale in export duration," MPRA Paper 31217, University Library of Munich, Germany.
  4. Albornoz, Facundo & Calvo Pardo, Héctor F. & Corcos, Gregory & Ornelas, Emanuel, 2012. "Sequential exporting," Journal of International Economics, Elsevier, Elsevier, vol. 88(1), pages 17-31.
  5. Dr.Ayako OBASHI, 2009. "Resiliency of Production Networks in Asia: Evidence from the Asian Crisis," Working Papers, Economic Research Institute for ASEAN and East Asia (ERIA) DP-2009-21, Economic Research Institute for ASEAN and East Asia (ERIA).
  6. Echazu, Luciana, 2009. "Product differentiation, firm heterogeneity and international trade: Exploring the Alchian-Allen effect," Research in Economics, Elsevier, Elsevier, vol. 63(2), pages 95-101, June.
  7. Changchun Hua & Douglas H. Brooks, 2010. "Asian Trade and Global Linkages," Working Papers id:3094, eSocialSciences.
  8. Deborah Swenson, 2006. "Competition and the Location of Overseas Assembly," Working Papers, University of California, Davis, Department of Economics 638, University of California, Davis, Department of Economics.
  9. Stirbat, Liviu & Record, Richard & Nghardsaysone, Konesawang, 2013. "Determinants of export survival in the Lao PDR," Policy Research Working Paper Series 6301, The World Bank.
  10. Deborah Swenson, 2005. "Outsourcing Price Decisions: Evidence from U.S. 9802 Imports," NBER Working Papers 11184, National Bureau of Economic Research, Inc.
  11. Dick Nuwamanya Kamuganga, 2012. "What Drives Africa's Export Diversification?," IHEID Working Papers, Economics Section, The Graduate Institute of International Studies 15-2012, Economics Section, The Graduate Institute of International Studies.
  12. Swenson, Deborah L., 2005. "Overseas assembly and country sourcing choices," Journal of International Economics, Elsevier, Elsevier, vol. 66(1), pages 107-130, May.
  13. Tibor Besedes & Thomas J. Prusa, 2004. "Surviving the U.S. Import Market: The Role of Product Differentiation," NBER Working Papers 10319, National Bureau of Economic Research, Inc.

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