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Whatever next? Export market choices of New Zealand firms

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Abstract

We examine product and market entry choices of New Zealand exporters, using an enterprise level dataset which links firm performance measures with detailed data on merchandise trade. We focus our enquiry not on the broad question of what determines a firm's ability to export, but on the subsequent question: given that a firm has the ability to export, what determines the choices they make about what and where to export? We simultaneously consider firm and market level determinants of export market entry. At the firm level we find that measures of general and specific prior trade experience play an important role in determining the firm's future export activities. That is, we find evidence of path dependence within firms. We also find evidence of path dependence across firms, with entry into new export relationships reflecting demonstration effects from the export activities of other firms in the local area. These results are robust to the inclusion of other determinants of exporting, including the macroeconomic performance of destination countries, exchange rate movements, and the past performance of the exporting firm.

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Paper provided by Reserve Bank of New Zealand in its series Reserve Bank of New Zealand Discussion Paper Series with number DP2009/19.

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Length: 41 p
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:nzb:nzbdps:2009/19

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Cited by:
  1. Cebeci, Tolga & Fernandes, Ana M., 2013. "Micro dynamics of Turkey's export boom in the 2000s," Policy Research Working Paper Series, The World Bank 6452, The World Bank.
  2. Enzo Cassino & David Oxley, 2013. "How Does the Exchange Rate Affect the Real Economy? A Literature Survey," Treasury Working Paper Series, New Zealand Treasury 13/26, New Zealand Treasury.
  3. Lawless, Martina, 2011. "Marginal Distance: Does Export Experience Reduce Firm Trade Costs?," Research Technical Papers, Central Bank of Ireland 2/RT/11, Central Bank of Ireland.
  4. Cebeci, Tolga & Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2012. "Exporter dynamics database," Policy Research Working Paper Series, The World Bank 6229, The World Bank.
  5. Philip R. Lane, 2011. "External Imbalances and Macroeconomic Policy in New Zealand," The Institute for International Integration Studies Discussion Paper Series, IIIS iiisdp376, IIIS.
  6. João Amador & Luca David Opromolla, 2008. "Product and Destination Mix in Export Markets," Working Papers, Banco de Portugal, Economics and Research Department w200817, Banco de Portugal, Economics and Research Department.
  7. Darian Woods & Andrew Coleman, 2012. "Price, Quality, and International Agricultural Trade," Working Papers, Motu Economic and Public Policy Research 12_08, Motu Economic and Public Policy Research.
  8. Vincenzo Verardi & Joachim Wagner, 2012. "Productivity Premia for German Manufacturing Firms Exporting to the Euro-Area and Beyond: First Evidence from Robust Fixed Effects Estimations," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 35(6), pages 694-712, 06.
  9. Philip R. Lane, 2013. "External imbalances and macroeconomic policy," New Zealand Economic Papers, Taylor & Francis Journals, Taylor & Francis Journals, vol. 47(1), pages 53-70, April.
  10. Procter, Roger, 2011. "Echanching Productivity: Towards an Updated Action Agenda," Occasional Papers, Ministry of Economic Development, New Zealand 11/1, Ministry of Economic Development, New Zealand.
  11. Richard Fabling & Arthur Grimes, 2014. "Over the Hedge: Do Exporters Practice Selective Hedging?," Working Papers, Motu Economic and Public Policy Research 14_01, Motu Economic and Public Policy Research.
  12. Richard Fabling & Lynda Sanderson, 2009. "Entrepreneurship and aggregate merchandise trade growth in New Zealand," Reserve Bank of New Zealand Discussion Paper Series, Reserve Bank of New Zealand DP2009/09, Reserve Bank of New Zealand.

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