Export Dynamics in Small Open Economies: Indigenous Irish Manufacturing Exports, 1985-2003

Abstract

The aim of this paper is to explore how a recent methodology developed to look at export dynamics in a region in a large economy can be extended to look at export dynamics in a small open economy, where local market size means that enterprises tend to engage in exporting at an early stage in their development. Building on work by Wagner (2004) and in the context of the recent trade modelling of export heterogeneity (e.g., Melitz (2003)), this paper explores export dynamics in the Irish indigenous manufacturing sector using Davis, Haltiwanger and Schuh (1996) type decomposition techniques from the labour turnover literature. Overall export growth rates in the manufacturing sector vary widely, and we focus particularly on two years when exceptional rates of growth and decline were experienced. We conduct our analysis using a plant level panel data set constructed from the annual Irish Census of Industrial Production for the period 1985 to 2003. We find that there is considerable entry/re-entry and exit/re-exit in the export market but most of the export dynamics are dominated by the activities of continuing exporters.