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Networks and the Dynamics of Firms' Export Portfolio: Evidence for Mexico

  • Juan de Lucio

    (High Council of Spanish Chambers of Commerce, Spain)

  • Raúl Mínguez

    (High Council of Spanish Chambers of Commerce, Spain)

  • Asier Minondo

    (Deusto Business School, Spain)

  • Francisco Requena

    ()

    (University of Sheffield, United Kingdom)

In this paper we use network-analysis tools to identify communities in the web of exporters' destinations. Next we use our network-based community measure as predictor of additional countries chosen by firms expanding their export destination portfolio. We defend that our network-based community measure is superior to extended gravity measures. This superiority stems from the fact that community is a revealed measure, is country-specific and can be calculated at the industry level. Using data on Mexican new exporters over the period 2003-2009, we show that the probability of choosing a new export destination multiplies almost by three if it belongs to the same community of any of the firm's previous destinations. The introduction of the network-based community variable improves the accuracy of the model up to 20% relative to a model that only includes gravity and extended gravity variables. We also show that industry-specific communities and general communities play similar roles in determining the dynamics of Mexican exporters' country portfolio.

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File URL: http://www.shef.ac.uk/economics/research/serps/articles/2014_003.html
File Function: First version, February 2014
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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2014003.

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Length: 36 pages
Date of creation: Feb 2014
Date of revision:
Handle: RePEc:shf:wpaper:2014003
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  1. Facundo Albornoz & Hector F. Calvo Pardo & Gregory Corcos & Emanuel Ornelas, 2010. "Sequential Exporting," Discussion Papers 10-08, Department of Economics, University of Birmingham.
  2. Frankel, Jeffrey & Stein, Ernesto & Wei, Shang-jin, 1995. "Trading blocs and the Americas: The natural, the unnatural, and the super-natural," Journal of Development Economics, Elsevier, vol. 47(1), pages 61-95, June.
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  4. Cadot, Olivier & Iacovone, Leonardo & Pierola, Denisse & Rauch, Ferdinand, 2011. "Success and failure of African exporters," Policy Research Working Paper Series 5657, The World Bank.
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  8. Facundo Albornoz & Hector Calvo-Pardo & Gregory Corcos & Emanuel Ornelas, 2012. "Sequential exporting: how firms break into foreign markets," CentrePiece - The Magazine for Economic Performance 364, Centre for Economic Performance, LSE.
  9. Raja Kali & Javier Reyes, 2007. "The architecture of globalization: a network approach to international economic integration," Journal of International Business Studies, Palgrave Macmillan, vol. 38(4), pages 595-620, July.
  10. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
  11. Kali, Raja & Reyes, Javier & McGee, Joshua & Shirrell, Stuart, 2013. "Growth networks," Journal of Development Economics, Elsevier, vol. 101(C), pages 216-227.
  12. Defever, Fabrice & Heid, Benedikt & Larch, Mario, 2015. "Spatial exporters," Journal of International Economics, Elsevier, vol. 95(1), pages 145-156.
  13. Morales, Eduardo & Sheu, Gloria & Zahler, Andrés, 2011. "Gravity and extended gravity: estimating a structural model of export entry," MPRA Paper 30311, University Library of Munich, Germany.
  14. Martina Lawless, 2013. "Marginal Distance: Does Export Experience Reduce Firm Trade Costs?," Open Economies Review, Springer, vol. 24(5), pages 819-841, November.
  15. Daniel X. Nguyen, 2010. "Demand Uncertainty: Exporting Delays and Exporting Failures," Discussion Papers 10-17, University of Copenhagen. Department of Economics.
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