IDEAS home Printed from https://ideas.repec.org/p/ptu/wpaper/w200817.html
   My bibliography  Save this paper

Product and Destination Mix in Export Markets

Author

Listed:
  • João Amador
  • Luca David Opromolla

Abstract

Expansion into foreign markets is a major decision for a firm and it involves choices about which countries to approach and which products to export. We use a new database that covers the universe of export transactions for firms located in Portugal for the period 1996-2005 in order to examine the joint decision of where and what to export. We find that multi-product and multi-destination firms are crucial in explaining the dynamics of export over time. The exporters' portfolio is very diversified in terms of sectors and product tenure and it is frequently modified over time. We show that, while continuing firms exporting continuing products to continuing destinations are fundamental in explaining the year-to-year growth rate of aggregate exports, the contribution of gross entry and exit of both destinations and products is, in absolute value, as important as the contribution of gross entry and exit of firms. Moreover, growth dynamics of new exporters proceeds along lines that are different from those characterizing the representative incumbent firm. The destination extensive margin is almost as important as the destination intensive margin and almost one-third of the latter is due to product switching (the product extensive margin). Firms access new destinations mostly by exporting new products, i.e. products that were not previously sold anywhere else by the firm. Products already exported by the firm to other destinations are an important but not the primary way to enter new destinations.

Suggested Citation

  • João Amador & Luca David Opromolla, 2008. "Product and Destination Mix in Export Markets," Working Papers w200817, Banco de Portugal, Economics and Research Department.
  • Handle: RePEc:ptu:wpaper:w200817
    as

    Download full text from publisher

    File URL: https://www.bportugal.pt/sites/default/files/anexos/papers/wp200817.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Pedro Martins & Luca David Opromolla, 2011. "Why Ex(Im)porters Pay More: Evidence from Matched Firm-Worker Panels," Working Papers w201123, Banco de Portugal, Economics and Research Department.
    2. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    3. Yeaple, Stephen Ross, 2005. "A simple model of firm heterogeneity, international trade, and wages," Journal of International Economics, Elsevier, vol. 65(1), pages 1-20, January.
    4. Holger Görg & Richard Kneller & Balázs Muraközy, "undated". "What Makes a Successful Exporter?," Discussion Papers 08/01, University of Nottingham, GEP.
    5. Joachim Wagner, 2012. "The Post-entry Performance of Cohorts of Export Starters in German Manufacturing Industries☆," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 19(2), pages 169-193, July.
    6. Impullitti, Giammario & Irarrazabal, Alfonso A. & Opromolla, Luca David, 2013. "A theory of entry into and exit from export markets," Journal of International Economics, Elsevier, vol. 90(1), pages 75-90.
    7. Andrew B. BERNARD & Emily J. BLANCHARD & Ilke VAN BEVEREN & Hylke Y. VANDENBUSSCHE, 2012. "Carry-Along Trade," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2012020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. Richard Fabling & Arthur Grimes & Lynda Sanderson, 2012. "Whatever next? Export market choices of New Zealand firms," Papers in Regional Science, Wiley Blackwell, vol. 91(1), pages 137-159, March.
    9. Békés, Gábor & Muraközy, Balázs & Harasztosi, Péter, 2011. "Firms and products in international trade: Evidence from Hungary," Economic Systems, Elsevier, vol. 35(1), pages 4-24, March.
    10. Costas Arkolakis & Marc-Andreas Muendler, 2010. "The Extensive Margin of Exporting Products: A Firm-level Analysis," CESifo Working Paper Series 3309, CESifo Group Munich.
    11. Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2011. "An Anatomy of International Trade: Evidence From French Firms," Econometrica, Econometric Society, vol. 79(5), pages 1453-1498, September.
    12. Joachim Wagner, 2012. "German multiple-product, multiple-destination exporters: Bernard-Redding-Schott under test," Economics Bulletin, AccessEcon, vol. 32(2), pages 1708-1714.
    13. Costas Arkolakis, 2016. "A Unified Theory of Firm Selection and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 131(1), pages 89-155.
    14. Mirabelle Muûls & Mauro Pisu, 2009. "Imports and Exports at the Level of the Firm: Evidence from Belgium," The World Economy, Wiley Blackwell, vol. 32(5), pages 692-734, May.
    15. Thierry Mayer & Gianmarco Ottaviano, 2008. "The Happy Few: The Internationalisation of European Firms," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 43(3), pages 135-148, May.
    16. Albornoz, Facundo & Calvo Pardo, Héctor F. & Corcos, Gregory & Ornelas, Emanuel, 2012. "Sequential exporting," Journal of International Economics, Elsevier, vol. 88(1), pages 17-31.
    17. Luís M B Cabral & José Mata, 2003. "On the Evolution of the Firm Size Distribution: Facts and Theory," American Economic Review, American Economic Association, vol. 93(4), pages 1075-1090, September.
    18. David Hummels & Rasmus J?rgensen & Jakob Munch & Chong Xiang, 2014. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data," American Economic Review, American Economic Association, vol. 104(6), pages 1597-1629, June.
    19. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    20. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2011. "Multiproduct Firms and Trade Liberalization," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1271-1318.
    21. Marcela Eslava & James Tybout & David Jinkins & C. Krizan & Jonathan Eaton, 2015. "A Search and Learning Model of Export Dynamics," 2015 Meeting Papers 1535, Society for Economic Dynamics.
    22. Jonathan Eaton, Marcela Eslava, Maurice Kugler,James Tybout, 1970. "Export Dynamics in Colombia: Firm-Level Evidence," Working Papers eg0036, Wilfrid Laurier University, Department of Economics, revised 1970.
    23. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    24. Leonardo Iacovone & BeataS. Javorcik, 2010. "Multi-Product Exporters: Product Churning, Uncertainty and Export Discoveries," Economic Journal, Royal Economic Society, vol. 120(544), pages 481-499, May.
    25. Erzo G. J. Luttmer, 2007. "Selection, Growth, and the Size Distribution of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 1103-1144.
    26. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2009. "Importers, Exporters and Multinationals: A Portrait of Firms in the U.S. that Trade Goods," NBER Chapters,in: Producer Dynamics: New Evidence from Micro Data, pages 513-552 National Bureau of Economic Research, Inc.
    27. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-1150, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fernandes, Ana P. & Tang, Heiwai, 2014. "Learning to export from neighbors," Journal of International Economics, Elsevier, vol. 94(1), pages 67-84.
    2. Cebeci, Tolga & Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2012. "Exporter dynamics database," Policy Research Working Paper Series 6229, The World Bank.
    3. repec:esr:resser:bkmnext335 is not listed on IDEAS
    4. Impullitti, Giammario & Irarrazabal, Alfonso A. & Opromolla, Luca David, 2013. "A theory of entry into and exit from export markets," Journal of International Economics, Elsevier, vol. 90(1), pages 75-90.
    5. Kaleb Girma Abreha & Valérie Smeets & Frédéric Warzynski, 2013. "Coping with the Crisis: Recent Evolution in Danish Firms' International Trade Involvement, 2000-2010," Economics Working Papers 2013-15, Department of Economics and Business Economics, Aarhus University.
    6. Alfonso A. Irarrazabal & Luca David Opromolla, 2009. "The Cross Sectional Dynamics of Heterogenous Trade Models," Working Papers w200924, Banco de Portugal, Economics and Research Department.
    7. Ana Paula Ribeiro & Paula Gracinda Teixeira Santos & Vitor Carvalho, 2013. "Export-led growth in Europe: Where and what to export?," EcoMod2013 5265, EcoMod.
    8. Joachim Wagner, 2013. "Micro-econometric studies of international firm activities and firm performance: introduction by guest editor," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(1), pages 1-3, March.
    9. Martins, Pedro S. & Opromolla, Luca David, 2009. "Exports, Imports and Wages: Evidence from Matched Firm-Worker-Product Panels," IZA Discussion Papers 4646, Institute for the Study of Labor (IZA).
    10. Chiriacescu, Bogdan & Lalinsky, Tibor & Čede, Urška & Meriküll, Jaanika & Harasztosi, Péter, 2016. "Export characteristics and output volatility: comparative firm-level evidence for CEE countries," Working Paper Series 1902, European Central Bank.
    11. Joachim Wagner, 2016. "A survey of empirical studies using transaction level data on exports and imports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 215-225, February.
    12. Mion, Giordano & Opromolla, Luca David, 2014. "Managers' mobility, trade performance, and wages," Journal of International Economics, Elsevier, vol. 94(1), pages 85-101.
    13. Martins, Pedro S. & Opromolla, Luca David, 2011. "Why Ex(Im)porters Pay More: Evidence from Matched Firm-Worker Panels," IZA Discussion Papers 6013, Institute for the Study of Labor (IZA).
    14. Ana Fernandes & Heiwai Tang, 2012. "Learning from Neighbors’ Export Activities: Evidence from Exporters’ Survival," Development Working Papers 337, Centro Studi Luca d'Agliano, University of Milano, revised 16 Jul 2012.
    15. Stefanie Haller & Jože Damijan & Ville Kaitila & Črt Kostevc & Mika Maliranta & Emmanuel Milet & Daniel Mirza & Matija Rojec, 2014. "Trading firms in the services sectors: comparable evidence from four EU countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(3), pages 471-505, August.
    16. Mion, Giordano & Opromolla, Luca David & Sforza, Alessandro, 2016. "The Diffusion of Knowledge via Managers' Mobility," CEPR Discussion Papers 11706, C.E.P.R. Discussion Papers.
    17. Arjan Lejour, 2015. "The Duration of Dutch Export Relations: Decomposing Firm, Country and Product Characteristics," De Economist, Springer, vol. 163(2), pages 155-176, June.
    18. Giordano Mion & Luca David Opromolla, 2011. "Managers’ Mobility, Trade Status, and Wages," Working Papers w201104, Banco de Portugal, Economics and Research Department.
    19. Steven Husted & Shuichiro Nishioka, 2015. "Productivity growth and new market entry," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(4), pages 687-712, November.
    20. Fernandes, Ana M. & Freund, Caroline & Pierola, Martha Denisse, 2016. "Exporter behavior, country size and stage of development: Evidence from the exporter dynamics database," Journal of Development Economics, Elsevier, vol. 119(C), pages 121-137.
    21. Rúben Branco & Luca David Opromolla, 2012. "Product switching or re-classification? An application to portuguese international trade," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
    22. Costas Arkolakis & Marc-Andreas Muendler, 2010. "The Extensive Margin of Exporting Products: A Firm-level Analysis," CESifo Working Paper Series 3309, CESifo Group Munich.
    23. Timoshenko, Olga A., 2015. "Learning versus sunk costs explanations of export persistence," European Economic Review, Elsevier, vol. 79(C), pages 113-128.
    24. João Amador & Luca David Opromolla, 2009. "Textiles and Clothing Exporting Sectors in Portugal - Recent Trends," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
    25. Movahedi, Mohammad, 2013. "Le commerce international, l’adoption de l’innovation et le choix de l’entrée-sortie à l’exportation des firmes
      [International trade, innovation adoption and export entry-exit choice of the firms]
      ," MPRA Paper 44268, University Library of Munich, Germany, revised 01 Jan 2014.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ptu:wpaper:w200817. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (DEE-NTDD). General contact details of provider: http://edirc.repec.org/data/bdpgvpt.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.