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Firms' exporting and importing activities: is there a two-way relationship?

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  • David Aristei
  • Davide Castellani
  • Chiara Franco

Abstract

The literature on firm heterogeneity and trade has highlighted that most trading firms tend to engage in both importing and exporting activities. This may be due to some common sunk costs or to a true state dependence. This paper provides some evidence that helps sort this issue out. Using firm level data for a group of 27 Eastern European and Central Asian countries from the World Bank Business Environment and Enterprise Performance Survey (BEEPS) over the period 2002-2008, we estimate a bivariate probit model of exporting and importing. The main finding is that there is a positive correlation between import and export at the level of the firm, but after controlling for size (and other firm level characteristics) importing have a positive effect on exporting, but exporting to not increase the probability of importing. The evidence is thus consistent with the presence of common sunk costs and with a one-way link between importing and exporting. The positive effect of import on export is mainly due to an increase in firm productivity and product innovation.

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Bibliographic Info

Paper provided by Università di Perugia, Dipartimento Economia, Finanza e Statistica in its series Quaderni del Dipartimento di Economia, Finanza e Statistica with number 99/2011.

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Length: 26 pages
Date of creation: 15 Dec 2011
Date of revision:
Handle: RePEc:pia:wpaper:99/2011

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Keywords: Exports; Imports; Firm heterogeneity; Eastern European and Central Asian countries;

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Citations

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Cited by:
  1. Cadot, Olivier & Carrere, Celine & Strauss-Kahn, Vanessa, 2011. "OECD imports : diversification of suppliers and quality search," Policy Research Working Paper Series 5627, The World Bank.
  2. Kazunobu HAYAKAWA & Toshiyuki MATSUURA, 2014. "Dynamic Two-way Relationship between Exporting and Importing: Evidence from Japan," Working Papers DP-2014-08, Economic Research Institute for ASEAN and East Asia (ERIA).
  3. Alessia Lo Turco & Daniela Maggioni, 2013. "On the Role of Imports in Enhancing Manufacturing Exports," The World Economy, Wiley Blackwell, vol. 36(1), pages 93-120, 01.
  4. Hayakawa, Kazunobu, 2012. "Firms' use of FTA schemes in exporting and importing : is there a two-way relationship?," IDE Discussion Papers 363, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  5. Italo Colantone & Rosario Crinò, 2011. "New Imported Inputs, New Domestic Products," Development Working Papers 312, Centro Studi Luca d\'Agliano, University of Milano.
  6. María D. Parra & Inmaculada Martínez-Zarzoso, 2014. "Imported intermediate inputs and Egyptian exports: Exploring the links," Working Papers 2014/09, Economics Department, Universitat Jaume I, Castellón (Spain).
  7. Alessia LO TURCO & Daniela MAGGIONI, 2012. "The micro evolution of trade and turnover in Turkey under the global crisis," Working Papers 376, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  8. Giuliano CONTI & Alessia LO TURCO & Daniela MAGGIONI, 2012. "Rethinking the import-productivity nexus for Italian manufacturing," Working Papers 381, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  9. Alessia LO TURCO & Daniela MAGGIONI, 2012. "Imports, exports and the firm product scope: evidence from Turkey," Working Papers 384, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  10. Maria Bas & Vanessa Strauss-Kahn, 2014. "Does importing more inputs raise exports? Firm-level evidence from France," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 150(2), pages 241-275, May.
  11. Joachim Wagner, 2013. "Micro-econometric studies of international firm activities and firm performance: introduction by guest editor," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 149(1), pages 1-3, March.

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