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Benefits of forced experimentation on exports

Author

Listed:
  • Juan de Lucio

    (Universidad Nebrija. Calle de Santa Cruz de Marcenado, 27, 28015, Madrid (Spain).)

  • Raúl Mínguez

    (Universidad Nebrija. Calle de Santa Cruz de Marcenado, 27, 28015, Madrid (Spain).)

  • Asier Minondo

    (Deusto Business School, University of Deusto, Camino de Mundaiz 50, 20012 Donostia - San Sebastián (Spain). Research aliate of Instituto Complutense de Estudios Internacionales.)

  • Francisco Requena

    (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)

Abstract

The severe reduction in domestic demand between 2008 and 2013 in Spain forced many firms to seek new customers in foreign markets. In this paper, we explore whether the increase in the crisis-motivated number of new exporters led to a larger number of regular exporters once domestic demand returned to pre-crisis levels. Using an instrumental variable approach, we find that a 10% increase in new exporters led to a 5% increase in new regular exporters. Since the economic crisis was not anticipated in Spain, our results establish a causal link between experimentation in foreign markets and discovery of new regular exporters. This evidence is consistent with alternative narratives where _rms had capacity constraints, were uncertain about the pro_tability of their export operations, and averse to risk or satis_ed with their non-exporter status prior to the crisis.

Suggested Citation

  • Juan de Lucio & Raúl Mínguez & Asier Minondo & Francisco Requena, 2018. "Benefits of forced experimentation on exports," Working Papers 1812, Department of Applied Economics II, Universidad de Valencia.
  • Handle: RePEc:eec:wpaper:1812
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    References listed on IDEAS

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    More about this item

    Keywords

    capacity constraints; risk aversion; experimentation; exports; Spain; Great Recession;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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