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Identifying supply-side constraints to export performance in Ecuador : an exercise with Investment Climate Survey data

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  • Correa, Paulo
  • Dayoub, Mariam
  • Francisco, Manuela

Abstract

The authors apply a Heckman selection model to the 2003 Investment Climate Survey (ICS) to investigate supply-side constraints to export performance at the firm level in Ecuador. To correct for the non-random truncation problems, they use the Heckman selection model to estimate the probability of exporting (export propensity) and the share of total sales that are exported (export intensity) by Ecuadorian firms. They develop a baseline model with 12 independent variables divided into three categories-idiosyncratic characteristics, technology, and business environment. The authors develop three other models with the addition of variables related to trade integration, business environment, and infrastructure. Results corroborate with the hypothesis implicit in the Heckman model, which considers both decisions made by a firm-whether to export, and how much of its sales to export-to be interdependent. In the Ecuadorian case, they find three important results for the firm's export performance: technology matters; infrastructure does not; and trade orientation is significant, with specialized firms tending to have smaller export intensity when their main trade partners are countries of the Andean Community, and the opposite happening if the United States is their main trade partner. The authors find a robust and stable relationship for export propensity and intensity with size, import of inputs, labor regulations, in-house research and development, quality certification, web-use, and foreign ownership. Also, capacity utilization and trade with the United States positively affect export intensity, while trade within the Andean Community has the opposite effect in the outcome variable. But they find no significant relationship for the infrastructure variables.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4179.

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Date of creation: 01 Mar 2007
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Handle: RePEc:wbk:wbrwps:4179

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Keywords: Free Trade; Private Participation in Infrastructure; Microfinance; Small Scale Enterprise; Markets and Market Access;

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References

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Citations

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Cited by:
  1. Gozde Isik & Yutaka Yoshino, 2010. "Patterns of Foreign Direct Investment Flows and Trade-Investment Inter-Linkages in Southern Africa : Linking Middle-Income and Low-Income Neighbors," World Bank Other Operational Studies 12990, The World Bank.
  2. Fagerberg, Jan & Srholec, Martin & Verspagen, Bart, 2009. "Innovation and Economic Development," MERIT Working Papers 032, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  3. Wignaraja, Ganeshan, 2012. "Innovation, learning, and exporting in China: Does R&D or a technology index matter?," Journal of Asian Economics, Elsevier, vol. 23(3), pages 224-233.
  4. Wignaraja, Ganeshan, 2013. "Understanding Innovation in Production Networks in East Asia," ADBI Working Papers 410, Asian Development Bank Institute.
  5. Edwards, Lawrence & Balchin, Neil, 2008. "Trade related business climate and manufacturing export performance in Africa: A firm-level analysis," MPRA Paper 32863, University Library of Munich, Germany.
  6. Wignaraja, Ganeshan, 2012. "Do Exporting Firms in the People’s Republic of China Innovate?," ADBI Working Papers 365, Asian Development Bank Institute.
  7. Keshari, Pradeep Kumar, 2013. "Comparative performance of foreign affiliates and domestic firms in the Indian machinery industry," MPRA Paper 33076, University Library of Munich, Germany, revised 20 Apr 2013.
  8. Wignaraja, Ganeshan, 2008. "FDI and Innovation as Drivers of Export Behaviour: Firm-level Evidence from East Asia," MERIT Working Papers 061, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  9. Marcelo José Braga Nonnenberg & Ana Paula Avellar, 2014. "Exportações E Processos Inovativos: Umestudo Para América Latina E Europa Do Leste," Anais do XL Encontro Nacional de Economia [Proceedings of the 40th Brazilian Economics Meeting] 105, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  10. Hoekstra, Ruth, 2013. "Boosting Manufacturing Firms' Exports? The role of trade facilitation in Africa," IEE Working Papers 197, Institut fuer Entwicklungsforschung und Entwicklungspolitik, Ruhr-Universitaet Bochum.
  11. Keshari, Pradeep Kumar, 2012. "FDI and firm level export competitiveness in the Indian machinery industry," MPRA Paper 47069, University Library of Munich, Germany.

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