On The Determinants Of Exports Survival

The aim of this paper is to explore the patterns of trade duration across regions and to identify its determinants. Using an extended Cox model, we evaluate the effects of country and product characteristics, as well as of trade costs on the duration of trade relationships from 96 countries from 1995 to 2004. First, the duration of trade relationships increases with the region level of development: trade relationships from richer economies face lower hazard rates (i.e. longer duration). Second, trade relationships involving differentiated products show a hazard rate that is 6% to 14% lower than trade relationships involving homogeneous goods. Third, high export costs systematically increase the probability of export failure but the effect diminishes with time, thus suggesting that export experience plays a role. Finally, the size of exports also matters: the larger the transaction, the higher the probability of survival. This is true whether we take average or initial values of exports. This would be evidence of hysteresis in the export status if trade values are seen to reflect sunk costs to export.