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Imported intermediate inputs and Egyptian exports: Exploring the links

  • María D. Parra

    ()

    (Department of Economics, Universitat Jaume I, Castellón, Spain)

  • Inmaculada Martínez-Zarzoso

    ()

    (Instituto de Economía Internacional, Universidad Jaume I, Castellón, Spain and Department of Economics, Georg-August Universitaet Goettingen, Göttingen, German)

This paper aims at exploring the links between firms'­ exporting and importing activities in Egyptian firms. With this aim, a panel dataset of 554 Egyptian manufacturing firms that contains yearly data over the period from 2003 to 2007 is used to estimate the probability of exporting /importing. According to the related literature a complementarity gain is generated when firms are involved in both activities because then they are able to internalize the common fixed costs to access a given foreign market (e.g. Kashara and Lapham, 2013). Stylized facts indicate that firms that start exporting or importing are more likely to become two-traders. The purpose of our research is to better understand this relationship in Egypt, which is the most populated and economically influential country in the Middle East. The main results show a high degree of hysteresis on past international activity, where past experience still most important to determine the continuance in the same activity and we achieve that Egyptian firm'­s face to higher sunk cost of imported intermediates than sunk cost faced to sell their products in foreign markets.

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Paper provided by Economics Department, Universitat Jaume I, Castellón (Spain) in its series Working Papers with number 2014/09.

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Length: 34 pages
Date of creation: 2014
Date of revision:
Handle: RePEc:jau:wpaper:2014/09
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