Foreign Sourcing And Exporting

The aim in this paper is analysing the role of sourcing intermediate inputs internationally on export decisions, distinguishing whether intermediate are sourced from firms belonging to the same business group or from independent suppliers. To analyse firm’s export decision, we use a specification that also accounts for sunk costs and the accumulated experience in export markets (i.e., foreign markets learning). We consider that importing intermediates might have direct and indirect effects (operating through productivity) on the export participation decision. The direct effects on exporting are isolated once we control for productivity and the effects of belonging to an international group. We use a manufacturing panel dataset drawn from the Spanish Survey on Business Strategies (ESEE) for the period 2006-2014. Both productivity and inward or outward FDI increase the probability of exporting. Moreover, our results uncover the existence of sunk costs and export markets learning, and also to the relevant role played by intermediate imports in firms’ export choices. Their effects act both through the (indirect) channel of enhancing firms’ productivity and through a direct effect related to product upgrading, more competitive selling prices, or learning from firm’s importing experience.