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Export Dynamics in Colombia: Transactions Level Evidence

  • Jonathan Eaton

    ()

  • Marcela Eslava

    ()

  • Maurice Kugler

    ()

  • James Tybout

    ()

We examine Colombian export transaction data from customs records in several dimensions. We begin with some basic statistics on the number and frequency of export transactions by a firm, overall and across individual markets. We then decompose the variation in overall exports into the number of transactions and the size of the average transaction, both at the aggregate level and for individual firms to explore gravity equations, where the patterns of exports and numbers of transactions are related to the distance with respect to the destination. The analysis is carried out both at the aggregate and the firm level. Then we explore the relationship between patterns of transactions numbers and shipment modes. Our results show great heterogeneity in the patterns of frequency and number of transactions across firms; the average firm sent about 75 shipments abroad in 2005, while the firm with largest number of transactions that same year dispatched more than 26,000 shipments. Moreover, while close to 35% of firms in the sample report a single export transaction over the period, for most firms with multiple transactions the average span between two transactions is less than a month. Part of this heterogeneity is shown to be related to the distance with respect to the destination market: firms exporting to more distant destinations make less frequent shipments than firms exporting to markets that are closer. This suggests that there are fixed costs per shipment inducing declining marginal cost of higher shipment volume. These patterns imply that, at the aggregate level, transactions numbers are the primary source of variation in exports. The variability in the numbers of transactions also explains an important part of the well-known negative relationship between aggregate exports and distance to a specific destination.

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Paper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 522.

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  1. Eaton, Jonathan & Kortum, Samuel S & Kramarz, Francis, 2009. "An Anatomy of International Trade: Evidence from French Firms," CEPR Discussion Papers 7111, C.E.P.R. Discussion Papers.
  2. Tibor Besedes, . "A Search Cost Perspective on Duration of Trade," Departmental Working Papers 2006-12, Department of Economics, Louisiana State University.
  3. Costas Arkolakis, 2008. "Market Penetration Costs and the New Consumers Margin in International Trade," NBER Working Papers 14214, National Bureau of Economic Research, Inc.
  4. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September.
  5. Marcela Eslava & John Haltiwanger & Adriana Kugler & Maurice Kugler, 2004. "The effects of structural reforms on productivity and profitability enhancing reallocation: Evidence from Colombia," Economics Working Papers 763, Department of Economics and Business, Universitat Pompeu Fabra.
  6. Brooks, Eileen L., 2006. "Why don't firms export more? Product quality and Colombian plants," Journal of Development Economics, Elsevier, vol. 80(1), pages 160-178, June.
  7. Erzo G. J. Luttmer, 2007. "Selection, Growth, and the Size Distribution of Firms," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 1103-1144, 08.
  8. James E. Rauch & Joel Watson, 1999. "Starting Small in an Unfamiliar Environment," NBER Working Papers 7053, National Bureau of Economic Research, Inc.
  9. Andrew Bernard & J. Bradford Jensen & Stephen Redding & Peter Schott, 2007. "Firms in International Trade," Working Papers 07-14, Center for Economic Studies, U.S. Census Bureau.
  10. Maurice Kugler, . "Spillovers from Foreign Direct Investment: Within or between Industries?," Borradores de Economia 369, Banco de la Republica de Colombia.
  11. Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2004. "Dissecting Trade: Firms, Industries, and Export Destinations," American Economic Review, American Economic Association, vol. 94(2), pages 150-154, May.
  12. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and Productivity in International Trade," Boston University - Institute for Economic Development 105, Boston University, Institute for Economic Development.
  14. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers.
  15. Sanghamitra Das & Mark J. Roberts & James R. Tybout, 2007. "Market Entry Costs, Producer Heterogeneity, and Export Dynamics," Econometrica, Econometric Society, vol. 75(3), pages 837-873, 05.
  16. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
  17. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco," NBER Working Papers 5715, National Bureau of Economic Research, Inc.
  18. Luca David Opromolla & Alfonso Irarrazabal, 2005. "Hysteresis in Export Markets," International Trade 0512003, EconWPA.
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