The 'Margin call'. Export experience and firm entry into new export markets

We use firm-level data on the universe of Italian exporters to characterize the evolution of aggregate goods exports during the period 2000-15. We first decompose aggregate annual export dynamics into the intensive and the extensive margin, where the latter is further broken down into its firm, product and market components. We document that the intensive margin and, to a lesser extent, net market entry have been the main drivers of export growth, counterbalancing the negative effect coming from firms ceasing their exporting activity. The contribution of the intensive margin comes mostly from medium-large and, especially, more productive firms, while that of net market entry is concentrated among medium-sized firms. We then focus on market entry and ask which characteristics are more significant in affecting the probability that an already-exporting firm enters a new destination market. We focus in particular on the role of export experience and show that firm-destination specific dimensions, such as the distance between the new market and the closest market already served by the firm and the contiguity between the two, play an important role. These results show the prevalence of expansion strategies that follow a proximity principle.