Importers and the Survival of New Exporters

New exporters tend to exit markets more often. Despite significant sunk costs of exporting, the rate of survival in the first year of a product in a new market is very low. In this paper, we use detailed export and import transactions panel data from Colombia to examine whether changes in the volume imported by exporting firms increases export survival. We use the lagged importers exchange rate index as an instrument for imports and control for different types of synergies and for firm, product and destination-year fixed effects. The main result shows that imports significantly increase the probability of export survival after the first year, especially when the number of products imported and the number of countries of origin of imports are higher and when the firm also imports from the destination country.