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Learning from Neighbors’ Export Activities: Evidence from Exporters’ Survival

  • Ana Fernandes

    ()

    (University of Exeter)

  • Heiwai Tang

    ()

    (Tufts University, MIT Sloan, and Centro Studi Luca d’Agliano)

Recent studies in international trade report that new exporters often start selling small amounts and cease exporting in the first year. These findings re.ect a substantial amount of uncertainty facing new exporters. In this paper we study whether export activities in the neighborhood reveal information about export profitability and thus enhance new exporters. performance. Using transaction-level data for the universe of exporters in China over the period of 2001-2005, we find that new exporters’ first-year sales and probability of survival are both higher in cities where there are more existing export activities in the same market (industry or destination country). Export activities in other markets do not generate any positive spillovers, and in some cases we find negative spillovers. Spillovers from processing exporters are weaker. Foreign exporters benefit less from neighboring export activities. The relation between the magnitude of spillovers and the proxies for demand uncertainty is non-monotonic. We empirically verify that our findings are unlikely to be spurious or resulted from spillovers through the credit-constraint or the imported-material channels.

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File URL: http://www.dagliano.unimi.it//media/WP2012_337.pdf
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Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 337.

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Length: 54
Date of creation: 16 Jul 2012
Date of revision: 16 Jul 2012
Handle: RePEc:csl:devewp:337
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  1. Ana Fernandes & Heiwai Tang, 2010. "The Determinants of Vertical Integration in Export Processing: Theory and Evidence from China," Discussion Papers Series, Department of Economics, Tufts University 0749, Department of Economics, Tufts University.
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