Export Duration Research Articles

Export duration and export product quality of firms: evidence from China

ABSTRACT This study analyzes how export duration affects firms’ export product quality. On the basis of Chinese firms’ micro data, we find that export duration has a significantly positive effect on the export product quality of firms by promoting their productivity and innovation ability. This study shows that the effect of export duration on the product quality of firms is not only reflected in the stage when they enter the export market. After entering the export market, the extension of export duration is also conducive to the improvement of firms’ product quality, supporting the wide presence of the effects of learning by exporting. Therefore, this study provides new empirical evidence to further understand the influence of export market on firms’ product quality.

Export duration and firm markups: evidence from China

Against the backdrop of China’s upgrading of its openness to the outside world, analyzing the impact of export markets on a firm’s markup—an important indicator of a firm’s pricing power and market power—is of great significance for improving the firm’s international competitiveness and the benefits of the global value chain. This study theoretically and empirically examines the effect of export duration on firm markups using micro data from Chinese manufacturing enterprises. According to a theoretical study, an increase in export duration will result in an increase in firm markups via the “production efficiency” channel but a decrease in firm markups via the “market-based pricing” channel. Therefore, the impact of an increase in export duration on the markups of firms is uncertain. Results of the empirical analysis reveal that the positive impact of an increase in export duration on the markups of Chinese manufacturing firms via the “production efficiency” channel is higher than the negative impact of an increase in export duration via the “market-based pricing” channel. Overall, the increase in export duration has a positive impact on Chinese manufacturing companies’ markups. This conclusion is valid after a series of robustness tests. Further analysis reveals that the impact of export duration on the markups of different types of Chinese manufacturing firms differs, and significant heterogeneity exists. This research can help us better understand how Chinese export firms fall into the “low markup trap” and offer fresh insight into how export markets affect company markups.

The Effect of Carbon Sink Afforestation Projects on China’s Forest Product Export Trade: Empirical Evidence from Chinese Microenterprises

Forestry carbon sinks are an important measure for enabling China to cope with global climate change and realize its “double carbon” goal. Carbon sink afforestation projects (CSAPs) are a type of forestry carbon sink projects, and the question of whether China’s forest products with an export orientation can adapt to the requirements of high-quality development is important for balancing the relationship between emissions reduction and development. We use the micro-data of forest product export enterprises provided by the China Customs Database and construct a difference-in-difference (DID) model to investigate the impact of CSAPs on China’s forest product export and its heterogeneity. The results show that CSAPs significantly increase the export scale of China’s forest products. CSAPs lead to significant heterogeneity regarding the forest product export scale in relation to regions, production factor intensity, trade pattern, enterprise ownership, and export destination countries. We further find that although the implementation of CSAPs significantly reduces the export types of forest products, it significantly promotes an increase in the export price and the expansion of the export quantity of forest products, and it optimizes the export structure of forest products to some extent. The “Belt and Road” initiative (BRI) has played a significant positive role in regulating the expansion of the forest product export scale with CSAPs. The implementation of CSAPs reduces the risk of termination of trade relations among forest product export enterprises and extends the export duration. The conclusions provide implications for policy makers and managers of forest product enterprises.

Old Firms and New Export Flows: Does Experience Increase Survival?

In this paper we present new empirical evidence on the relationship between exporting experience and the duration of exports at the firm-product-destination level. We find that the direct effect of experience on export flow survival is negative. However, when we include interactions between experience and firm export diversification measures, this effect becomes positive. This suggests that more experienced firms launch more risky export flows which increases the probability of failure of any individual product-destination pairing.

English

This paper examines the competitiveness of The Gambia agri-food exports from 2012 to 2021 utilizing the revealed comparative advantage index, the Kaplan-Meier survival function, and Cox regression model. The results indicate that thirteen of the twenty-four products have comparative advantages in the global market, while seven of the twenty-four products have comparative advantages in the regional market. In terms of product structure, raw materials are sources of comparative advantage in global trade. While processed products offer comparative advantages in regional trade. In general, global agri-food trade has comparative advantages over regional agri-food trade. However, the duration test indicates that competitive positions are generally declining. Survival chances fell from 96% at the start of the period to 13% at the end, indicating that The Gambia faces fierce competition in global and regional agri-food trade. The hazard regression analysis reveals that inflation and good governance significantly reduce the hazard rate and hence improve the duration of agro-food exports. Key words: The Gambia, cox regression, agro-food trade, comparative advantage, competitiveness.

Export duration and product innovations: do born globals learn by exporting differently?

PurposeThis paper aims to study the learning-by-exporting effect among small-to-medium-sized enterprises (SMEs). Specifically, the authors propose a dynamic perspective and suggest that learning-by-exporting is duration-dependent and contingent upon the born global internationalization strategy. In earlier phases of export activities, exporting has had a strong positive effect on SMEs’ innovations, which, however, diminishes over time. This inverted U-shape effect is even more distinct for born global firms.Design/methodology/approachThe authors used longitudinal data with 1,689 Canadian SMEs to test their hypotheses. A two-stage instrumental approach is used to take into account the endogeneity of the born global international strategy on new product innovations.FindingsBorn globals learn faster at the early stages of exporting but also restrain their innovations more strongly than gradual internationalizers in the longer run, leveling out the initial learning advantages of newness. Thus, this study suggests that born globals have a significantly different learning trajectory than gradual internationalizers.Practical implicationsTo maximize the benefits of exporting on innovation, managers should focus on learning during the initial years of exporting. However, once this period has passed, it is advisable for managers to invest in research and development as well as other innovation activities to complement the learning effect of exporting. Born global firms experience more rapid learning at the initial stage of exporting, but such learning effects wear off quicker later than gradually internationalized firms. For SME managers, this study helps draw their attention to the learning benefits of exporting in the initial years of export participation.Originality/valueThis study corroborates recent studies arguing for a “learning-by-exporting” effect. Providing longitudinal firm-level evidence, the authors also forward a dynamic perspective and show that learning by exporting is duration dependent and contingent upon the market entry strategy pursued by SMEs.

Can Export Market Diversification Mitigate Agricultural Export Volatility? A Trade Network Perspective

ABSTRACT Using the social network analysis (SNA) method to calculate the level of agricultural export market diversification in various countries, this study examined the impact of agricultural export market diversification on export volatility from the supply network perspective based on HS6-digit agricultural export data. We identified that the agricultural export market diversification significantly reduces the export volatility. Specifically, the effect of diversifying the export market of processed agricultural products in stabilizing export volatility is greater than that of primary agricultural products. The stabilizing effect of emerging markets and developing countries or regions is more evident than developed countries or regions. Moreover, the export market diversification can stabilize the volatility of agricultural exports through two mechanisms: increasing the international market share and extending the export duration.

Sustainable FDI and comparative advantage for product export survival: a developing countries perspective

Establishing stable export relations is significant for developing countries to realize industrialization through exporting manufactured products. Based on the export data of 100 developing countries on the product level from 1999 to 2015, this paper empirically explores the relationship between FDI and product export survival of the host country using the survival analysis model. The estimations show that FDI is conducive to the extension of the export duration of domestic products, and this effect is more evident in products with comparative advantages. Mechanism inspections prove that FDIs extend the export duration of products by improving their quality. To overcome endogenous problems, this paper establishes instrumental variables of FDI based on population and geographical factors. The results of the two-stage least square regression support the conclusions derived from the benchmark regression. This paper provides new empirical evidence for the role of FDI in export promotion and resource allocation.

Energy Logistic Regression and Survival Model: Case Study of Russian Exports.

The importance of environmental sustainability is becoming more and more obvious, so the rationale behind long-term usage of solely non-renewable energy sources appeared questionable. This study aims to identify, using Kaplan-Meier survival analysis and logistic regressions, the main determinants that affect the duration of Russian non-renewable energy exports to different regions of the world. Data were retrieved from the databanks of the World Development Indicators (WDI), World Integrated Trade Solution (WITS), and the French Centre for Prospective studies and International Information (CEPII). The obtained results point to the fact that approximately 52% of energy products survive beyond their first year of trading, nearly 38% survive beyond the second year, and almost 18% survive to the twelfth year. The survival of Russian non-renewable energy exports differs depending on the region, and the affecting factors are of different importance. The duration of Russian non-renewable energy exports is significantly linked to Russia's GDP, Total export, and Initial export values. A decline in Russia's GDP by 1% is associated with an increasing probability of a spell ending by 2.9% on average, in turn growing Total export and Initial export values positively linked with the duration of non-renewable energy exports from Russia. These findings may have practical relevance for strategic actions aimed at approaching both energy security and environmental sustainability.

The impact of FTAs on export duration: Evidence from China’s agricultural firms

A growing body of literature has emerged on the links between free trade agreement (FTA) and agricultural export margins. As a key component of intensive margins, export survival and duration play essential roles in long-term and sustainable export growth. We investigated the impact of FTAs on agricultural export duration from the perspective of firm-destination pair. Based on highly disaggregated firm-level panel data of Chinese agricultural exporters covering the period of 2000–2016, we applied the proper survival method to empirically analyze the effect of FTA on export duration and survival. The results identify dynamic export stylized facts among firm-destination country pairs: although most of the agricultural firm-destination export relations demonstrated longer duration than those of other industries in China, they were still short-lived. Most importantly, we confirmed that FTA produced two opposite effects: Compared to non-FTA partners, the FTA membership role helps extend the length of export duration for agricultural export relation in general. However, for newly created relations, the implementation of FTA increased the hazard rate of export failure and shortened the length of duration. Our results cast a new light on firm-level export survival issue and FTA policy, and provide implications for both agricultural exporters and policymakers.

Exploring the duration of exports: evidence from Cote d'Ivore

This paper investigates the effect of urbanization on export duration in Cote d’Ivoire using HS 6-digit level bilateral export data between Cote d’Ivoire and 155 countries from 1996 to 2018. We found that the mean and median duration of exporting in Cote d’Ivoire are 1.8 years and 1 year, respectively. Using a discrete-time logit model with random effects, we established that urbanization in the importing country reduces survival of Ivorian exports, specifically, in Sub-Saharan Africa, and in low- and middle-income countries. Urbanization in Europe and Central Asia and in high-income countries improves survival of Ivorian exports, while the internal urbanization index has not contributed to maintain export duration.

Institutional quality and the duration of agri‐food trade flows

AbstractRecent trade disruptions and their consequences on supply chains show the importance of stable trade relations for exporters' economic planning and importers' supply security. Both instability in trading partners' economic and institutional environment and differences between them are likely to exacerbate these disruptions. We investigate the role of exporters' institutional quality (IQ) and its similarity with importers' IQ in the stability of trade links. We focus on the trade links of agri‐food products exported from sub‐Saharan African (SSA) countries to the European Union (EU‐28) and consider three dimensions of IQ: ‘government selection, monitoring, and replacement’; ‘efficiency of policy formulation and implementation’; and ‘respect of citizens and state for institutions’. Using a discrete‐time duration model, we show that the duration of SSA exports to the EU‐28 increases with higher exporters' IQ and similarity of trading partners' IQ. The strongest impact of exporters' IQ is associated with ‘government selection, monitoring, and replacement’. In terms of the similarity of trading partners, ‘respect of citizens and state for institutions’ has the largest impact on trade durations. Our findings suggest that the improvement of countries' IQ may boost the stability of trade relationships. Moreover, the similarity of IQs between trading partners supports the stability of trade links and should be carefully considered when establishing new trade relations.

On export duration puzzles

AbstractWe investigate two puzzles in the export duration literature. The first puzzle has to do with the frequent entries and exits of firms in export markets, which are at odds with the large fixed export costs in such markets. We introduce convex production technologies in a trade model to show how variable marginal costs create direct linkages between export markets. As fixed export costs vary across destinations, more productive firms need not necessarily export to more destinations. Cost convexity implies that the probability of supplying a given export market is adversely affected by positive export shocks in other markets. This is supported by our empirical analysis of bilateral flows for over 200 agri‐food products to 176 destinations originating from six large exporting countries. The second puzzle has to do with the paradoxical effect of tariffs reported in empirical export duration studies. When endogeneity is addressed, tariffs increase the probability of an export failure.

How Does the FTA Affect the Duration of Agricultural Exports? Evidence from China

How Does the FTA Affect the Duration of Agricultural Exports? Evidence from China

Industrial plans, export destinations and product quality

AbstractThis paper explores the links between policy support, export destinations and product quality. Depending on the export industry and target destination (policy support, income level), the theories suggest a competing relationship between policy support and high‐income exporting on quality upgrading. Consistent with the notion that policy support only matters when exporting to low‐income destinations, empirical results show that policy support improves exporters’ product quality and mitigates the inefficiency of the quality valuation mechanism when exporting to low‐income countries, but reduces product quality by distorting the quality valuation mechanism when exporting to high‐income countries. These results are robust within different measures of policy support and product quality. Heterogeneity analyses show that the impact of policy support and its relationship with high‐income exporting only held for firms with high extensive margins, while foreign ownership and export duration can mitigate the quality reduction impact caused by policy support for high‐income exporting.

Experience and market signals in export entry decisions

AbstractExport entry deterrence is a result of export uncertainty, which inhibits the discovery of new exports and prevents a country from realising its true comparative advantage. This paper examines how firms resolve uncertainty through the combination of two learning channels: learning from others and their own export experience. Using Chilean customs data (2007–2016), I find that early entrants have a short export duration and have little export experience. When combining the two learning channels, I find that less experienced exporters are more responsive to new information. Significantly, when observing a 10% increase in average initial export growth, less experience firms have double the entry probability compared with more experienced firms.

Durability of Zambia’s Agricultural Exports

This paper establishes the determinants of the export durability of agriculture products in Zambia with specific attention to maize, sugar, cotton, and tobacco between 1996 and 2019. We find that approximately 39% of Zambia’s agricultural products were exported beyond the first year of trading and less than 10% lasted up to 6 years of trading. The mean and median duration of exporting agricultural products in Zambia was 1.7 years and 1 year, respectively. Among the products, maize had the highest export duration after the first year of trading, followed by sugar, tobacco, and cotton. Results of the discrete-time logit and probit models with random effects revealed that the duration of total agricultural products was significantly impacted by common colony, contiguity, partner’s gross domestic product (GDP), Zambia’s GDP, initial exports, and total exports. Of these factors, colonial history and Zambia’s GDP reduced export duration, while contiguity, partner’s GDP, initial exports, and total exports increased the durability of exports in Zambia. The effect of Zambia’s GDP was uniform across all individual agricultural products. Total exports also significantly impacted all other agriculture products in a similar manner except for maize. Export durability for cotton was significantly impacted by the Regional Trade Agreements (RTAs), while the export durability of tobacco was significantly impacted by distance, contiguity, and partner’s GDP. To increase the duration of agriculture exports, we propose the exporting of finished agriculture products (and not just raw materials), which have a higher market value and duration probability. Farmers also need support with export subsidies, increased foreign market access (especially to economies with higher buying power), and negotiated favorable trade terms in the region and around the globe.

Trade duration of Chinese shrimp exports

Seafood is among the most highly traded food commodities, and one will expect trade patterns to be highly dynamic. In this paper, trade duration is investigated for Chinese shrimp exports using firm-level data for the period 2007–2015. In line with the results from the general literature, most trade relationships in the Chinese exports of shrimp are short-lived and influenced by the market as well as product characteristics. The results indicate that it is also important to account for firm-specific characteristics, large firms have more stable trade relationships. It is also worthwhile to note that the firms located within Special Economic Zones (SEZs) have a shorter trade duration than those outside of SEZs, indicating these firms’ opportunistic market behavior.

Firm‐level export duration: The importance of market‐specific ownership linkages

AbstractThis paper explores the impact of a firm's market‐specific ownership linkages and trade complementarities on different dimensions of its exporting longevity. Unlike previous studies that were mostly based on country‐product‐level data, this paper uses transaction‐level trade data on the population of firms in Slovenia in the 2002–11 period, matched with detailed origin/direction of inward/outward FDI information to determine a firm's integration in international production networks. Our results indicate that firm's bilateral inward and outward FDI flows with an export‐destination country have a strong positive effect on a firm's export survival in that market. Importance of market‐specific ownership linkages for export duration is exclusively driven by intermediate goods which suggests prolonged export duration through production network involvement. However, the perseverance effect of bilateral FDI ties on export spells has been weakened during the crisis period. We find pronounced market‐ and product‐related trade complementarities as either exporting or importing experience with the relevant market/product substantially improves the chances of a product–market export spell continuing. Finally, the risk of exports termination is lower for a firm's core export products.

What makes a successful exporter? An introduction

AbstractThe papers in this issue continue with the tradition of adding puzzles pieces to the overall picture of the impact and importance of firm international activities. In "What makes a successful exporter?", we have collected twelve papers, the majority of which were presented at the 13th annual ISGEP workshop in Ljubljana, Slovenia on 20–21 September 2018. The common thread linking these papers is that they explore both what it means to be an exporter and the ramifications of exporting on firms and the economy as a whole. On the one hand, this special issue addresses the role of foreign sourcing, export experience in the board of directors and credit supply shocks on the propensity to export, as well as the factors that affect firms' overall readiness to export. On the other hand, it investigates various measures of performance in the export markets, such as export duration, markups, quality upgrading and product mix.