On the Pure-Exporters of Developing Economies

Abstract

Pure-exporters, firms that export most of their products, produce sizable amounts of GDPs in many developing economies. Since pure-exporters are mainly independent from the domestic market conditions, the granular nature of the economy, following Gabaix (2011), paves the way for considering these special exporters. This paper, using firm level data from WBES 2006-2015 for 135 developing economies, first, discovers characteristics of pure-exporters that are different from the regular exporters. Pure-exporters are found to be larger, mostly dependent on one main product, concentrated in several sectors and have higher labor share but lower labor productivity. On the other side, the firms in the countries with higher aggregate pure-exporter activities have higher labor productivity. Finally, it proposes cross-country evidence on the relationship between the pure-exporters and business cycle fluctuations. The pure-exporter activities are found to negative relationship with volatilities of GDP and consumption, and a positive relationship with the inflation. These results can be useful in understanding the implications of policies on the pure-exporter subsidies in many developing countries.