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Lifting the Domestic Veil: The Challenges of Exporting Differentiated Goods Across the Development Divide

Author

Listed:
  • Alejandro Artopoulos
  • Daniel Friel
  • Juan Carlos Hallak

Abstract

Several developing countries feature weak performances as exporters of differentiated goods to developed countries. This paper builds a conceptual framework to explain the obstacles that prevent producers of differentiated products from establishing a consistent presence in the developed world and the process through which those obstacles may be overcome. We build our framework based on case studies of export emergence in four Argentine industries: motorboats, television programs, wines, and wooden furniture. We find that exporting consistently to developed countries requires drastic changes in how business is conceived and conducted relative to the practices that prevail among domestically-oriented firms. Attempts by these firms to export often do not succeed because they approach foreign markets the same way that they approach the domestic one. Their failure to change the business approach stems from their inability to access critical (tacit) knowledge about differences in consumption patterns and business practices in developed countries. In three of the sectors we study, an export pioneer is the first to implement the necessary changes to established practices. His actions set a benchmark, unleashing a diffusion process that fosters export emergence in the sector. The most salient feature of export pioneers is their knowledge advantage about foreign markets stemming from their embeddedness in the business community of their industry in a developed country.

Suggested Citation

  • Alejandro Artopoulos & Daniel Friel & Juan Carlos Hallak, 2011. "Lifting the Domestic Veil: The Challenges of Exporting Differentiated Goods Across the Development Divide," NBER Working Papers 16947, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16947 Note: ITI
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    References listed on IDEAS

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    1. Freund, Caroline & Pierola, Martha Denisse, 2010. "Export entrepreneurs : evidence from Peru," Policy Research Working Paper Series 5407, The World Bank.
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    Cited by:

    1. Albornoz, Facundo & Calvo Pardo, Héctor F. & Corcos, Gregory & Ornelas, Emanuel, 2012. "Sequential exporting," Journal of International Economics, Elsevier, pages 17-31.
    2. Massimiliano Bratti & Giulia Felice, 2012. "Buyer-Supplier Relationships, Internationalization and Product Innovation," Development Working Papers 327, Centro Studi Luca d'Agliano, University of Milano, revised 13 Nov 2012.
    3. Juan Carlos Hallak & Jagadeesh Sivadasan, 2009. "Firms' Exporting Behavior under Quality Constraints," Working Papers 09-13, Center for Economic Studies, U.S. Census Bureau.
    4. Chen, Natalie & Juvenal, Luciana, 2016. "Quality, trade, and exchange rate pass-through," Journal of International Economics, Elsevier, pages 61-80.
    5. Jaimovich, Esteban & Merella, Vincenzo, 2015. "Love for quality, comparative advantage, and trade," Journal of International Economics, Elsevier, pages 376-391.
    6. Charles Sabel & Eduardo Fernandez-Arias & Ricardo Hausmann & Andres Rodriguez-Clare & Ernesto H. Stein, 2012. "Export Pioneers in Latin America," Research Department Publications 4769, Inter-American Development Bank, Research Department.
    7. Alejandro Artopoulos & Daniel Friel & Juan Carlos Hallak, 2011. "Export Emergence of Differentiated Goods from Developing Countries: Four Argentine Cases," Working Papers 107, Universidad de San Andres, Departamento de Economia, revised Mar 2011.
    8. Munasib, Abdul & Roy, Devesh, 2014. "Financial reforms, product differentiation, and trade," Economics Letters, Elsevier, vol. 123(1), pages 37-41.
    9. Chakrabarty, Subhajit & Nag, Biswajit, 2014. "Perceptions of international trade barriers: Empirical study of small apparel firms," MPRA Paper 52635, University Library of Munich, Germany.
    10. Hallak, Juan Carlos & Sivadasan, Jagadeesh, 2013. "Product and process productivity: Implications for quality choice and conditional exporter premia," Journal of International Economics, Elsevier, pages 53-67.
    11. Artopoulos, Alejandro & Friel, Daniel & Hallak, Juan Carlos, 2013. "Export emergence of differentiated goods from developing countries: Export pioneers and business practices in Argentina," Journal of Development Economics, Elsevier, pages 19-35.
    12. Andrea González & Juan Carlos Hallak & Peter K. Schott & Tatiana Soria Genta, 2012. "Insertion of Argentine Firms in Global Value Chains Not Oriented to the Mass Market: The Cases of High-End Footwear and The Basso Group," IDB Publications (Working Papers) 4253, Inter-American Development Bank.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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