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Exporting from a small landlocked economy : an assessment of firm-product-destination survival rates in the Lao PDR

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  • Stirbat, Liviu
  • Record, Richard
  • Nghardsaysone, Konesawang

Abstract

This paper analyzes previously unreleased firm-level customs transaction data from the Lao PDR in order to assess the determinants of cohort survival among exporters. The authors find that export flows in value terms are dominated by the intensive margin, with large firms continuing to supply the same products to the same markets. On the extensive margin, new export spells for firms, products and firm-product-destination units are very small and short-lived, suggesting that although there is significant experimentation and discovery by firms, there is only limited capacity to stay in markets once an entry is made. Regression analyses of the factors that influence survival past the first year reveal that this is positively correlated with the initial dollar value (starting big makes a difference) and is helped by the firm's experience with the product and the destination, but hindered by a lack of focus. Agglomeration of exporters in the same destination with the same product is beneficial, an effect analogous to external economies of scale. The authors conclude by recommending that the focus of export promotion activity should be on helping existing exporters find and stay in new markets.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5695.

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Date of creation: 01 Jun 2011
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Handle: RePEc:wbk:wbrwps:5695

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Keywords: Markets and Market Access; Microfinance; E-Business; Economic Theory&Research; Water and Industry;

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References

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  1. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
  2. Cadot, Olivier & Iacovone, Leonardo & Pierola, Denisse & Rauch, Ferdinand, 2011. "Success and failure of African exporters," Policy Research Working Paper Series 5657, The World Bank.
  3. Tibor Besedes & Thomas Prusa, 2006. "Ins, outs, and the duration of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 266-295, February.
  4. João Amador & Luca David Opromolla, 2010. "The Margins of Exports: Firms, Products and Destinations," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
  5. Jhonatan Eaton & Marcela Eslava & Maurice Kugler & James Tybout, . "Export Growth in Colombia: Firm-Level Evidence," Borradores de Economia 446, Banco de la Republica de Colombia.
  6. Volpe Martincus, Christian & Carballo, Jerónimo, 2008. "Is export promotion effective in developing countries? Firm-level evidence on the intensive and the extensive margins of exports," Journal of International Economics, Elsevier, vol. 76(1), pages 89-106, September.
  7. Brenton, Paul & Newfarmer, Richard, 2007. "Watching more than the Discovery channel : export cycles and diversification in development," Policy Research Working Paper Series 4302, The World Bank.
  8. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Trade costs, firms and productivity," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 917-937, July.
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Cited by:
  1. Stirbat, Liviu & Record, Richard & Nghardsaysone, Konesawang, 2013. "Determinants of export survival in the Lao PDR," Policy Research Working Paper Series 6301, The World Bank.

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