Learning to export and the timing of entry to export markets
Firms that engage in exporting normally enter their first export markets a number of years after beginning to sell locally, then enter subsequent export markets progressively. Standard trade models are essentially static and do not capture these elementary facts about exporting, which biases the estimation of trade patterns and limits understanding of potentially important aspects of firms’ exporting behaviour. This paper proposes a model for the timing of entry to new export markets. The model endogenously generates the timing of entry to each market through a learning mechanism: the fixed cost of entry to a given export market is reduced by the experience gained from having entered other markets. More productive firms are less sensitive to the learning effect and therefore (1) enter markets more quickly and (2) enter larger markets earlier and smaller markets later than less productive firms. These predictions are confirmed using Swedish firm-level data. The latter prediction in particular is difficult to explain using alternative mechanisms and therefore endorses the learning effect as an explanation for the timing of entry. The model additionally predicts that more productive firms export more widely and that firms of all productivity levels enter nearer markets earlier, which are strong features of the data.
|Date of creation:||05 May 2011|
|Date of revision:||24 Aug 2011|
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- Van Biesebroeck, Johannes, 2005.
"Exporting raises productivity in sub-Saharan African manufacturing firms,"
Journal of International Economics,
Elsevier, vol. 67(2), pages 373-391, December.
- Johannes Van Biesebroeck, 2003. "Exporting Raises Productivity in Sub-Saharan African Manufacturing Plants," NBER Working Papers 10020, National Bureau of Economic Research, Inc.
- De Loecker, Jan, 2007. "Do exports generate higher productivity? Evidence from Slovenia," Journal of International Economics, Elsevier, vol. 73(1), pages 69-98, September.
- Jan De Loecker, 2004. "Do Exports Generate Higher Productivity? Evidence from Slovenia," LICOS Discussion Papers 15104, LICOS - Centre for Institutions and Economic Performance, KU Leuven.