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Identifying supply-side constraints to export performance in Ecuador : an exercise with Investment Climate Survey data

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  • Correa, Paulo
  • Dayoub, Mariam
  • Francisco, Manuela

Abstract

The authors apply a Heckman selection model to the 2003 Investment Climate Survey (ICS) to investigate supply-side constraints to export performance at the firm level in Ecuador. To correct for the non-random truncation problems, they use the Heckman selection model to estimate the probability of exporting (export propensity) and the share of total sales that are exported (export intensity) by Ecuadorian firms. They develop a baseline model with 12 independent variables divided into three categories-idiosyncratic characteristics, technology, and business environment. The authors develop three other models with the addition of variables related to trade integration, business environment, and infrastructure. Results corroborate with the hypothesis implicit in the Heckman model, which considers both decisions made by a firm-whether to export, and how much of its sales to export-to be interdependent. In the Ecuadorian case, they find three important results for the firm's export performance: technology matters; infrastructure does not; and trade orientation is significant, with specialized firms tending to have smaller export intensity when their main trade partners are countries of the Andean Community, and the opposite happening if the United States is their main trade partner. The authors find a robust and stable relationship for export propensity and intensity with size, import of inputs, labor regulations, in-house research and development, quality certification, web-use, and foreign ownership. Also, capacity utilization and trade with the United States positively affect export intensity, while trade within the Andean Community has the opposite effect in the outcome variable. But they find no significant relationship for the infrastructure variables.

Suggested Citation

  • Correa, Paulo & Dayoub, Mariam & Francisco, Manuela, 2007. "Identifying supply-side constraints to export performance in Ecuador : an exercise with Investment Climate Survey data," Policy Research Working Paper Series 4179, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4179
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    Cited by:

    1. Wignaraja, Ganeshan, 2008. "FDI and Innovation as Drivers of Export Behaviour: Firm-level Evidence from East Asia," MERIT Working Papers 2008-061, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Petrit Gashi, 2014. "Human Capital and Export Decisions: The Case of Small and Medium Enterprises in Kosovo," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 16(2), pages 91-120, December.
    3. Ganeshan Wignaraja, 2013. "Understanding Innovation in Production Networks in East Asia," Trade Working Papers 23395, East Asian Bureau of Economic Research.
    4. Edwards, Lawrence & Balchin, Neil, 2008. "Trade related business climate and manufacturing export performance in Africa: A firm-level analysis," MPRA Paper 32863, University Library of Munich, Germany.
    5. Keshari, Pradeep Kumar, 2013. "Comparative performance of foreign affiliates and domestic firms in the Indian machinery industry," MPRA Paper 33076, University Library of Munich, Germany, revised 20 Apr 2013.
    6. Fagerberg, Jan & Srholec, Martin & Verspagen, Bart, 2010. "Innovation and Economic Development," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 833-872, Elsevier.
    7. Marcelo José Braga Nonnenberg & Ana Paula Avellar, 2013. "Exportações e Processos Inovativos: Um Estudo Para a América Latina e a Europa do Leste," Discussion Papers 1899, Instituto de Pesquisa Econômica Aplicada - IPEA.
    8. Stojcic, Nebojsa, 2011. "The Competitiveness of exporters from Croatian manufacturing industry," MPRA Paper 109128, University Library of Munich, Germany.
    9. Mai Anh NGO, 2015. "Exporting and Firm-Level Credit Constraints-Evidence from Ghana," Working Papers DP-2015-27, Economic Research Institute for ASEAN and East Asia (ERIA).
    10. Philip Tuaño & George Manzano & Isabela Villamil, 2014. "Determinants of export intensity and propensity among small and mediumsized enterprised: The case of the Philippines," ARTNeT Working Papers 140, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    11. Wignaraja, Ganeshan, 2012. "Innovation, learning, and exporting in China: Does R&D or a technology index matter?," Journal of Asian Economics, Elsevier, vol. 23(3), pages 224-233.
    12. Wignaraja, Ganeshan, 2012. "Do Exporting Firms in the People’s Republic of China Innovate?," ADBI Working Papers 365, Asian Development Bank Institute.
    13. Nebojsa Stojcic & Djuro Benic & Petra Karanikic, 2014. "Regional determinants of export competitiveness in Croatian manufacturing industry," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 32(2), pages 193-212.
    14. Hoekstra, Ruth, 2013. "Boosting Manufacturing Firms' Exports? The role of trade facilitation in Africa," IEE Working Papers 197, Ruhr University Bochum, Institute of Development Research and Development Policy (IEE).
    15. Gozde Isik & Yutaka Yoshino, 2010. "Patterns of Foreign Direct Investment Flows and Trade-Investment Inter-Linkages in Southern Africa : Linking Middle-Income and Low-Income Neighbors," World Bank Publications - Reports 12990, The World Bank Group.
    16. Keshari, Pradeep Kumar, 2012. "FDI and firm level export competitiveness in the Indian machinery industry," MPRA Paper 47069, University Library of Munich, Germany.
    17. Nora Aboushady & Chahir Zaki, 2019. "Investment climate and Trade Margins in Egypt: Which Factors Do Matter?," Economics Bulletin, AccessEcon, vol. 39(4), pages 2275-2301.
    18. Lucía Garcés-Galdeano & Martin Larraza-Kintana & Cristina Cruz & Ignacio Contín-Pilart, 2017. "Just about money? CEO satisfaction and firm performance in small family firms," Small Business Economics, Springer, vol. 49(4), pages 825-839, December.

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    Keywords

    Free Trade; Private Participation in Infrastructure; Microfinance; Small Scale Enterprise; Markets and Market Access;
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