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Institutions and export dynamics

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  • Araujo, Luis
  • Mion, Giordano
  • Ornelas, Emanuel

Abstract

We study how contract enforcement and export experience shape firm export dynamics in an environment with incomplete information. We show that exporters start with higher volumes and sell for longer periods in countries with better contracting institutions and when they have prior foreign experience. However, conditional on survival, firm export growth decreases with the quality of the country's institutions. Controlling for time-varying firm unobservables and other factors, we confirm these and other predictions using a panel of Belgian exporting firms from 1995 to 2008. The results highlight the manifold implications of export experience and contracting institutions for firm dynamics in foreign markets.

Suggested Citation

  • Araujo, Luis & Mion, Giordano & Ornelas, Emanuel, 2016. "Institutions and export dynamics," Journal of International Economics, Elsevier, vol. 98(C), pages 2-20.
  • Handle: RePEc:eee:inecon:v:98:y:2016:i:c:p:2-20 DOI: 10.1016/j.jinteco.2015.08.004
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    More about this item

    Keywords

    Firm-level exports; Contract enforcement; Trade dynamics; Export experience; Contracting institutions;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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