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Where do Firms Export, How Much and Why?

Author

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  • Lawless, Martina

    (Central Bank and Financial Services Authority of Ireland)

  • Whelan, Karl

    (University College Dublin)

Abstract

The empirical finding that exporting firms are more productive on average than non-exporters has provoked a large theoretical literature based on models such as Melitz (2003), where more productive firms are more likely to overcome costs associated with trade. This paper provides a systematic empirical assessment of the Melitz framework using a unique Irish dataset that includes information on destinations and firm characteristics such as productivity. We find a number of interesting deviations from the model's predictions including a high degree of unpredictable idiosyncratic participation in export markets by firms, a relatively weak positive correlation between the extent of export participation and export sales, and a limited role for productivity in explaining firm exporting behavior. We illustrate the effect of firm heterogeneity on gravity regressions of aggregate trade flows and show how past exporting to a particular market has a strong impact on the current probability of exporting there.

Suggested Citation

  • Lawless, Martina & Whelan, Karl, 2008. "Where do Firms Export, How Much and Why?," Research Technical Papers 6/RT/08, Central Bank of Ireland.
  • Handle: RePEc:cbi:wpaper:6/rt/08
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    References listed on IDEAS

    as
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    4. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, pages 1-25.
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    Cited by:

    1. Di Comite, Francesco & Thisse, Jacques-François & Vandenbussche, Hylke, 2014. "Verti-zontal differentiation in export markets," Journal of International Economics, Elsevier, pages 50-66.
    2. Berman, Nicolas & Berthou, Antoine & Héricourt, Jérôme, 2015. "Export dynamics and sales at home," Journal of International Economics, Elsevier, pages 298-310.
    3. Emami Namini, Julian & Facchini, Giovanni & Lopez, Ricardo, 2011. "Export growth and factor market competition: theory and evidence," CEPR Discussion Papers 8256, C.E.P.R. Discussion Papers.
    4. Martina Lawless, 2013. "Marginal Distance: Does Export Experience Reduce Firm Trade Costs?," Open Economies Review, Springer, vol. 24(5), pages 819-841, November.
    5. Daniela Federici & Valentino Parisi, 2012. "Corporate Taxation and Exports," Working Papers 2012-01, Universita' di Cassino, Dipartimento di Scienze Economiche.
    6. Berman, Nicolas & Rebeyrol, Vincent & Vicard, Vincent, 2015. "Demand learning and firm dynamics: evidence from exporters," CEPR Discussion Papers 10517, C.E.P.R. Discussion Papers.
    7. shepherd, Ben, 2010. "Geographical Diversification of Developing Country Exports," World Development, Elsevier, vol. 38(9), pages 1217-1228, September.
    8. Matthew Cole, 2011. "Not all trade restrictions are created equally," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 411-427, September.
    9. Kichun Kang & Phyllis Keys & Yoon S. Shin, 2016. "Free Trade Agreements And Bridgehead Effect: Evidence From Korea–Chile Fta," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(05), pages 1-17, December.
    10. Daniela Federici & Valentino Parisi, 2014. "Corporate Taxation and Exports: Evidence from Italian Firm-Level Data," Review of Economics & Finance, Better Advances Press, Canada, vol. 4, pages 23-38, May.
    11. Berman, Nicolas & Rebeyrol, Vincent & Vicard, Vincent, 2017. "Demand learning and firm dynamics: evidence from exporters," TSE Working Papers 17-871, Toulouse School of Economics (TSE).
    12. Cole, Matthew T. & Davies, Ronald B., 2011. "Strategic tariffs, tariff jumping, and heterogeneous firms," European Economic Review, Elsevier, vol. 55(4), pages 480-496, May.
    13. Peter McQuade, 2010. "The Evolution of International Trade on the Extensive and Intensive Margins," The Institute for International Integration Studies Discussion Paper Series iiisdp325, IIIS, revised Apr 2010.
    14. Munch, Jakob R. & Nguyen, Daniel X., 2014. "Decomposing firm-level sales variation," Journal of Economic Behavior & Organization, Elsevier, pages 317-334.
    15. Jienwatcharamongkhol, Viroj, 2012. "Distance Sensitivity of Export: A Firm-Product Level Approach," Ratio Working Papers 201, The Ratio Institute.
    16. Philipp J.H. Schröder & Allan Sørensen, 2010. "The Theoretical Equivalent of Empirically Measurable Exporter Productivity when Firms are Heterogeneous," Economics Working Papers 2010-06, Department of Economics and Business Economics, Aarhus University.
    17. Jan Jørgensen & Philipp Schröder & Zhihao Yu, 2012. "Globalization beyond partitioning: back to Krugman’s world," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(1), pages 73-87, April.
    18. Viroj Jienwatcharamongkhol, 2014. "Distance Sensitivity of Export: A Firm-Product Level Approach," Journal of Industry, Competition and Trade, Springer, vol. 14(4), pages 531-554, December.
    19. Jienwatcharamongkhol, Viroj, 2012. "Distance Sensitivity of Export: A Firm-Product Level Approach," Working Papers 2012:33, Lund University, Department of Economics.
    20. Nguyen, Daniel X., 2012. "Demand uncertainty: Exporting delays and exporting failures," Journal of International Economics, Elsevier, pages 336-344.
    21. David Hummels & Kwan Yong Lee, 2017. "The Income Elasticity of Import Demand: Micro Evidence and An Application," NBER Working Papers 23338, National Bureau of Economic Research, Inc.
    22. Salimans, Tim, 2012. "Variable selection and functional form uncertainty in cross-country growth regressions," Journal of Econometrics, Elsevier, pages 267-280.
    23. Nguyen, Daniel X., 2012. "Demand uncertainty: Exporting delays and exporting failures," Journal of International Economics, Elsevier, pages 336-344.
    24. Matthew T. Cole, 2009. "The choice of modeling firm heterogeneity and trade restrictions," Working Papers 200920, School of Economics, University College Dublin.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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