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Product and Destination Mix in Export Markets

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  • João Amador
  • Luca David Opromolla

Abstract

Expansion into foreign markets is a major decision for a firm and it involves choices about which countries to approach and which products to export. We use a new database that covers the universe of export transactions for firms located in Portugal for the period 1996-2005 in order to examine the joint decision of where and what to export. We find that multi-product and multi-destination firms are crucial in explaining the dynamics of export over time. The exporters' portfolio is very diversified in terms of sectors and product tenure and it is frequently modified over time. We show that, while continuing firms exporting continuing products to continuing destinations are fundamental in explaining the year-to-year growth rate of aggregate exports, the contribution of gross entry and exit of both destinations and products is, in absolute value, as important as the contribution of gross entry and exit of firms. Moreover, growth dynamics of new exporters proceeds along lines that are different from those characterizing the representative incumbent firm. The destination extensive margin is almost as important as the destination intensive margin and almost one-third of the latter is due to product switching (the product extensive margin). Firms access new destinations mostly by exporting new products, i.e. products that were not previously sold anywhere else by the firm. Products already exported by the firm to other destinations are an important but not the primary way to enter new destinations.

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Bibliographic Info

Paper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w200817.

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Date of creation: 2008
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Handle: RePEc:ptu:wpaper:w200817

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Citations

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Cited by:
  1. Rúben Branco & Luca David Opromolla, 2012. "Product switching or re-classification? An application to portuguese international trade," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
  2. Ana Fernandes & Heiwai Tang, 2012. "Learning from Neighbors’ Export Activities: Evidence from Exporters’ Survival," Development Working Papers 337, Centro Studi Luca d\'Agliano, University of Milano, revised 16 Jul 2012.
  3. Pedro Martins & Luca David Opromolla, 2010. "Exports, Imports and Wages:Evidence from Matched Firm-Worker-Product Panels," Working Papers w201002, Banco de Portugal, Economics and Research Department.
  4. Giordano Mion & Luca David Opromolla, 2011. "Managers' Mobility, Trade Status and Wages," CEP Discussion Papers dp1044, Centre for Economic Performance, LSE.
  5. Arjan Lejour, 2013. "The duration of Dutch export relations: decomposing firm, country and product characteristics," CPB Discussion Paper 258, CPB Netherlands Bureau for Economic Policy Analysis.
  6. Impullitti, Giammario & Irarrazabal, Alfonso A. & Opromolla, Luca David, 2013. "A theory of entry into and exit from export markets," Journal of International Economics, Elsevier, vol. 90(1), pages 75-90.
  7. Mion, Giordano & Opromolla, Luca David, 2013. "Managers’ mobility, trade performance, and wages," Working Paper Series 1596, European Central Bank.
  8. 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.
  9. Ana Fernandes & Heiwai Tang, 2014. "Learning to Export from Neighbors," CESifo Working Paper Series 4699, CESifo Group Munich.
  10. Martins, Pedro S. & Opromolla, Luca David, 2011. "Why Ex(Im)porters Pay More: Evidence from Matched Firm-Worker Panels," IZA Discussion Papers 6013, Institute for the Study of Labor (IZA).
  11. João Amador & Luca David Opromolla, 2009. "Textiles and Clothing Exporting Sectors in Portugal - Recent Trends," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
  12. Alfonso A. Irarrazabal & Luca David Opromolla, 2009. "The Cross Sectional Dynamics of Heterogenous Trade Models," Working Papers w200924, Banco de Portugal, Economics and Research Department.
  13. Harold Creusen & Henk Kox & Arjan Lejour & Roger Smeets, 2011. "Exploring the Margins of Dutch Exports: A Firm-Level Analysis," De Economist, Springer, vol. 159(4), pages 413-434, December.
  14. Cebeci, Tolga & Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2012. "Exporter dynamics database," Policy Research Working Paper Series 6229, The World Bank.
  15. Kaleb Girma Abreha & Valérie Smeets & Frédéric Warzynski, 2013. "Coping with the Crisis: Recent Evolution in Danish Firms' International Trade Involvement, 2000-2010," Economics Working Papers 2013-15, School of Economics and Management, University of Aarhus.
  16. Paula Gracinda Santos & Ana Paula Ribeiro & Vitor Manuel Carvalho, 2013. "Export-led growth in Europe: Where and what to export?," FEP Working Papers 479, Universidade do Porto, Faculdade de Economia do Porto.

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