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Foreign Market Conditions and Export Performance: Does 'Crowdedness' Reduce Exports?

  • Breinlich, Holger
  • Tucci, Alessandra

This paper analyzes the link between firm exports and the competitive environment in foreign markets. We derive a theory-based econometric specification linking destination-specific exports to foreign demand and the degree of 'crowdedness' of foreign markets. The latter is a measure of the number and efficiency of firms competing in a given market and the barriers impeding their access. We estimate this specification on a large sample of Italian manufacturing firms between 1992 and 2003 and use the results for counterfactual experiments. We find that increases in the crowdedness of foreign markets have reduced Italian exports by around 0.2%-0.3% per year. However, other factors such as higher unit labor costs and weak demand growth in Italy's main export market (the EU15) have been much more important in explaining Italian export performance. Our results also indicate that China's impact on Italian exports is small and if anything positive.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7975.

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Date of creation: Sep 2010
Date of revision:
Handle: RePEc:cpr:ceprdp:7975
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  1. Gordon H. Hanson & Raymond Robertson, 2008. "China and the Manufacturing Exports of Other Developing Countries," NBER Working Papers 14497, National Bureau of Economic Research, Inc.
  2. Santos Silva, J.M.C & Tenreyro, Silvana, 2005. "The Log of Gravity," CEPR Discussion Papers 5311, C.E.P.R. Discussion Papers.
  3. Bronwyn H. Hall & Francesca Lotti & Jacques Mairesse, 2009. "Innovation and productivity in SMEs. Empirical evidence for Italy," Temi di discussione (Economic working papers) 718, Bank of Italy, Economic Research and International Relations Area.
  4. Giorgio Barba Navaretti & Riccardo Faini & Alessandra Tucci, 2008. "Does Family Control Affect Trade Performance? Evidence for Italian Firms," Development Working Papers 260, Centro Studi Luca d\'Agliano, University of Milano.
  5. Andrea Caggese & Vicente Cuñat, 2005. "Financing Constraints and Fixed-Term Employment Contracts," Working Papers 266, Barcelona Graduate School of Economics.
  6. Benfratello, Luigi & Schiantarelli, Fabio & Sembenelli, Alessandro, 2006. "Banks and Innovation: Microeconometric Evidence on Italian Firms," IZA Discussion Papers 2032, Institute for the Study of Labor (IZA).
  7. Tiziano Razzolini & Davide Vannoni, 2011. "Export Premia and Subcontracting Discount: Passive Strategies and Performance in Domestic and Foreign Markets," The World Economy, Wiley Blackwell, vol. 34(6), pages 984-1013, 06.
  8. Alfredo Minerva & Lorenzo Casaburi & Valeria Gattai, 2008. "Firms’ International Status and Heterogeneity in Performance: Evidence From Italy," Working Papers 2008.3, Fondazione Eni Enrico Mattei.
  9. repec:tpr:qjecon:v:123:y:2008:i:2:p:441-487 is not listed on IDEAS
  10. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-21, September.
  11. Rubinstein, Yona & Helpman, Elhanan & Melitz, Marc, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," Scholarly Articles 3228230, Harvard University Department of Economics.
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