Export Participation Research Articles

Environmental regulations and export performance: firm-level evidence from China’s low-carbon pilot policy

The rapid increase in global carbon emissions has raised significant concerns, prompting various environmental regulations, including China’s low-carbon pilot policy. Prior studies have shown mixed results regarding the impact of environmental regulations on firms’ export performance. Using data from Chinese industrial firms from 2001 to 2015, this study investigates how the low-carbon pilot policy, a quasi-experiment, influences firms’ exports. We employ the Heckman Two-Step Method and the Difference-in-Differences approach to separate the effects on firms’ export participation and the effects on export scales. We find that firms in the pilot provinces/cities become less likely to export after the implementation of the low-carbon pilot policy compared to firms in the non-pilot regions, resulting in a relative decrease in export probability by 4.5 percentage points. For the firms that export, their export values relatively decrease by 10 percent after the policy implementation. The effects are mainly driven by firms in Eastern China. The policy leads to higher exit rates and lower entry rates in international markets for firms in pilot regions. After the implementation of the low-carbon pilot policy, exporting firms increase the unit price of their export products, reduce the quantity of export products, and diversify both their export destinations and product types. However, we do not find evidence supporting the Pollution Haven mechanism.

Why do some African firms export? The role of regional economic communities?

AbstractThis article examines whether African manufacturing firms are strategically located for regional market access. The study uses a large dataset from the World Bank Enterprise Surveys and is based on 6800 firms from 26 African countries. The study findings show that firms located in countries with dual membership to Regional Economic Communities (RECs) exhibit a significantly higher propensity to export than firms in countries affiliated with a single REC. Additionally, our findings suggest that RECs enhance export participation by mitigating customs delays. However, constraints in the business environment can hinder the propensity of firms to export. In particular, the study identifies informal competition and power outages as substantial barriers that increase the cost of doing business and diminish the potential benefits of REC membership. These results underscore the importance of advancing economic integration across Africa to bolster export participation. Additional improvements in the domestic business environments should address the constraints that hinder firms' international competitiveness.

Multifaceted impacts of R&D activities on exporting behavior

ABSTRACT This study uses data from China to investigate the multidimensional impacts of R&D activities on a firm’s exporting behaviour. The findings confirm the well-documented positive effects of innovations on export participation and export volumes while also uncovering additional aspects of innovation’s influence on exporting. Specifically, firms that engage in research activities charge lower prices, offer a wider variety of exported products, enter more international markets, and demonstrate a tendency to expand into smaller and less affluent export markets. These findings offer cohesive and unified support for the effects of innovation on export that align with the implications of heterogeneous-firm trade models.

Assessing trade supply chain vulnerability and trade participation of SMEs in India: insights from a comprehensive analysis

PurposeThis study presents the impact of Economic Policy Uncertainty (EPU)-induced Trade Supply Chain Vulnerability (TSCV) on the Small and Medium-Sized Enterprises (SMEs) in India by leveraging the World Bank Enterprise Survey data for 2014 and 2022. Applying econometric techniques, it examines firm size’ influence on productivity and trade participation, providing insights for enhancing SME resilience and trade participation amid uncertainty.Design/methodology/approachThe econometric techniques focus on export participation, along with variables such as total exports, firm size, productivity, and capital intensity. It addresses crucial factors such as the direct import of intermediate goods and foreign ownership. Utilizing the Cobb-Douglas production function, the study estimates Total Factor Productivity, mitigating endogeneity and multicollinearity through a two-stage process. Besides, the study uses a case study of North Indian SMEs engaged in manufacturing activities and their adoption of mitigation strategies to combat unprecedented EPU.FindingsResults reveal that EPU-induced TSCV reduces exports, impacting employment and firm size. Increased productivity, driven by technological adoption, correlates with improved export performance. The study highlights the negative impact of TSCV on trade participation, particularly for smaller Indian firms. Moreover, SMEs implement cost-based, supplier-based, and inventory-based strategies more than technology-based and risk-based strategies.Practical implicationsPolicy recommendations include promoting increased imports and inward foreign direct investment to enhance small firms’ trade integration during economic uncertainty. Tailored support for smaller firms, considering their limited capacity, is crucial. Encouraging small firms to engage in international trade and adopting diverse SC mitigation strategies associated with policy uncertainty are vital considerations.Originality/valueThis study explores the impact of EPU-induced TSCV on Indian SMEs’ trade dynamics, offering nuanced insights for policymakers to enhance SME resilience amid uncertainty. The econometric analysis unveils patterns in export behavior, productivity, and factors influencing trade participation during economic uncertainty.

Spillover effects of foreign and domestic exporting firms on export decisions of local manufacturing firms: Evidence from Vietnam

Our study examines the spillover effects that arise from foreign and domestic exporting firms on the export decisions of local manufacturing firms in Vietnam between 2010 and 2018. There are positive horizontal spillover effects from both foreign and domestic exporting firms, while negative spillover effects are detected through the backward channel. Domestic exporting firms are found to generate positive forward spillover effects, whereas foreign direct investment exporting firms have negative forward spillover effects. Moreover, we observe opposite spillover effects from foreign and domestic exporting firms on the export exit of domestic firms, with a negative impact under the horizontal channel and a positive impact under the backward channel. Our research also reveals the effects of firms’ characteristics on the export participation and exit of domestic firms. The study suggests that the Vietnamese government should focus on enabling the FDI sector to create positive spillover effects, attracting foreign firms with export potential as well as supporting domestic exporting firms using and providing local intermediate inputs, and improving the technological and absorptive capabilities of domestic firms.

Demand Uncertainty, Selection, and Trade

This paper examines the role of uncertainty on elasticities of trade flows with respect to variable trade costs in a canonical model of trade with monopolistic competition and heterogeneous firms. We identify two channels through which uncertainty impacts trade: through export participation thresholds (the selection effect) and the distribution of shocks governing export selection (the dispersion effect). While the selection effect dampens trade elasticities under uncertainty, the dispersion effect is ambiguous. We develop a methodology for using customs firm-level data to quantify trade elasticities under uncertainty, and the magnitude of each of the two channels through which uncertainty impacts trade. We find that uncertainty amplifies trade elasticities, on average, indicating that the dispersion effect of idiosyncratic firm-level shocks dominates -- though the effect is heterogeneous across industries. The overall magnitude of the endogenous selection mechanism on trade elasticities is small, indicating that the main drivers of trade in this class of trade models are overwhelmingly incumbent firms.

Policies and incentives for promotion of pulses production and consumption: A Review

The paper delves into the current state of pulses in India, examining technological advancements, production trends, costs and returns, extent of subsidies and other policies related to pulses, competitiveness, and input utilization. It also assesses non-market benefits, such as nitrogen fixation, and suggests incorporating them into incentives for pulses production and consumption. Additionally, the paper explores the nutritional contributions of pulses and their potential distribution through government schemes to aid the impoverished. Policy scenarios, including the role of Minimum Support Price and procurement, are scrutinized for their historical impact on pulse production. The paper evaluates the demand-supply gap and advocates for improved trade policies. Ultimately, it recommends incentive policies based on the ecological contributions of pulses, use of advanced statistical methods for advanced production estimations to guide informed decisions by traders and importers, and long-term government contracts for pulses import/export to stabilize domestic prices. The goal is to ensure affordability for consumers and encourage farmers’ participation in export markets, especially for crops like chickpea.

The anatomy of exporting wineries of Argentina

PurposeThis study aims to provide a detailed characterization of Argentinean exporting wineries using a new rich firm-level data set to understand how capabilities and business strategies differ among firms with different levels of involvement in the export market.Design/methodology/approachA survey was distributed among all wineries along all wine regions of Argentina; the 45-min questionnaire was answered by 230 wineries, a representative sample with a response rate of 26.3% of the total population of Argentinean wineries. The survey assessed the interaction between wineries’ dynamics and characteristics and their participation in export markets. In the comparative analysis, the results are presented by dividing the sample into four categories according to the export intensity of the wineries.FindingsHigh-intensity exporting wineries in Argentina differ from other Argentinean wineries in several dimensions. In particular, the most internationalized Argentinean wineries are the most endowed with higher capabilities; they follow a specific business model emphasizing product differentiation, quality upgrading, brand building and the development of distribution channels. Exporting wineries from Argentina adopt business practices that differ from those that prevail among wineries that only target the domestic market. They have developed firm capabilities such as human capital and technology to play a critical role in quality upgrading for their participation in global wine markets.Originality/valueTo the best of the authors’ knowledge, this paper is the first to study the Argentinean exporting wineries using a firm-level sizeable representative sample.

Firm Innovation, Financial Constraints and Exports: Evidence From Indian SMEs

Using rich firm-level data on 4517 small and medium-sized Indian manufacturing firms, we explore the implications of financial constraints on firm innovation and further investigate the interplay between financial constraints and export participation on firm innovation. Our findings highlight a negative association between firm innovation and financial constraints and a positive association between firm innovation and export. Moreover, we find that firms participating in international trade are well-positioned to offset the challenges of financial constraints on firm innovation.

혁신 지식 탐색과 활용, 기업 규모가 수출 참여에 미치는 영향: 산업의 조절 효과

혁신 지식 탐색과 활용, 기업 규모가 수출 참여에 미치는 영향: 산업의 조절 효과

Learning to Export and Learning by Exporting: The Case of East Java Manufacturing Industry

The manufacturing industry contribution and its proportion to the exports in recent years has become dominant in supporting the East Java Province economy. Previous literature showed the impact of export participation in increasing a firm’s productivity. Meanwhile, little literature explains how the manufacturing industry learns about the benefits of exports so that it leads to an increase in a firm’s productivity. Using a large and medium industrial panel dataset from 2008 to 2015 in East Java Province, this study found that export participation in the manufacturing industry significantly increases a firm’s productivity. This increased productivity is due to the selectivity of productivity because manufacturing firms experience learning to export. In addition, this study also found that the manufacturing industry in East Java experienced learning by exporting even with a short duration since entering the export market. By knowing the learning scheme of export participation in the manufacturing industry in East Java, policy recommendations can be established, such as export promotion strategies, export market expansion, and decreased export costs so that the manufacturing industry can increase productivity.

Export Participation and Employment of Contract Workers in Organized Manufacturing Plants in India

The share of contract workers, i.e., the workers employed through contractors, as against the workers directly employed by factories, out of all workers employed in India’s organized manufacturing has increased significantly over the last three decades, reaching 38.6% in 2019–2020. Using plant-level panel data for the years 2008–2009 to 2017–2018, the paper examines econometrically whether export participation by the organized sector manufacturing plants in India induced them to hire contract workers. The empirical results indicate that the export market participation by manufacturing plants tends to raise their probability of employing contract workers. This effect of export participation on the probability of employing contract workers is found for plants in the medium-low and low-technology industries, and the impact is bigger in the medium-high and high-technology industries. The effect is found to be relatively stronger for bigger plants than small-sized plants. In high-technology industries, in-house firm-specific skill formation is important for firms for their being able to export their products, and, hence, in many technology-oriented plants of these industries export participation should not induce them to employ contract workers. Some support for this hypothesis is found in the empirical results obtained in the study.

Firm-Learning and Productivity in Nigeria's Manufacturing Sector

ABSTRACT: The manufacturing sector plays a strategic role as a major contributor to economic growth and development. However, the harsh business environment in Nigeria has constrained learning and capability building in the Nigerian manufacturing sector. The present state of the manufacturing sector underscores the need for firm-level learning and strategic policy actions. This paper utilized data from the Enterprise Survey Panel covering the periods 2007, 2009, and 2014/2015 to investigate firm learning and productivity in the Nigerian manufacturing sector. Case study illustrations were also undertaken to further provide insights into the links between learning variables and the productivity of selected firms in the sector. Data were analyzed using descriptive statistics; dynamic panel model (DPM) via ordinary least squares (OLS) and General Method of Moments (GMM) techniques. The results of the estimation show there is a positive and significant relationship between export participation lagged by one period (t-1) and the current firm performance. A one-period lag of the learning variables, namely: skills and training increased the productivity of firms. The case study illustrations revealed that major learning capabilities include customer feedback; through employees, staff training/seminars/workshops, and supplier feedback. The paper provides evidence to conjecture that the STI mode of learning, which involves formal research and development (R&D) in firms is not deep enough, and that domestic firms have less productivity relative to firms with some proportion of foreign ownership. Also, some of the constraints to learning and productivity are an unstable regulatory environment, poor infrastructure and high cost of doing business. The paper recommends both formal and informal modes/mechanisms of learning are important to ensure improved productivity of manufacturing firms in Nigeria Also, learning opportunities may differ within and across manufacturing subsectors. Industry regulators or agencies should organize to provide a forum for firms and relevant stakeholders to regularly interact on learning experiences to learn from each other and collaborate to address obstacles to productivity.

Export Spillovers from Foreign Direct Investment in Kenya's Manufacturing Sector: A Double Hurdle Approach

ABSTRACT: This paper investigates export spillovers from foreign direct investment on the exporting activities of domestic manufacturing firms in Kenya. Specifically, the paper aims at identifying the transmission channels through which foreign direct investment affects the export propensity and export intensity decisions of domestically-owned firms. The study also examines the importance of firm-level heterogeneity on the occurrence and behavior of spillover channels. The study uses a panel data set for manufacturing firms in Kenya, obtained from the World Bank Enterprise Surveys, conducted in three waves covering the period 2007–2018. Employing the Double-Hurdle model approach, and using the maximum likelihood estimation technique, we empirically demonstrate the relevance and significance of distinguishing three channels for intra-industry (horizontal) spillovers – demonstration effects, information effects and competition effects channels and one channel for vertical spillovers, that is, backward linkage channel. Findings of this study shows that domestically-owned firms in Kenya experience significant positive export spillovers on their export participation decisions through the demonstration effects channel and significant negative spillovers via the competition effects channel. The findings also show significant positive export spillover effects on the export intensity decisions of domestically-owned firms via information and competition effects channels and significant negative export spillover effects via the backward linkages channel. The results further provide evidence that firms belonging to industries with low technological levels were unable to absorb spillover benefits from foreign presence via the demonstration effects channel. The results also indicate that small and medium firms were unable to reap export spillovers benefits via information effects and backward linkage channels. The findings have important policy implications for managers of firms and policymakers in Kenya and other developing countries. To enhance export-related spillover benefits, domestic firms need to enhance their absorptive capacities by upgrading their technical capacities and improving quality standards. Governments should facilitate the exchange of information on investor needs, their capacities and skills requirements, thus bridging information gaps between domestic suppliers and foreign investors in addition to supporting domestic market linkages.

How Internal Capability Matters in Increasing Firm Performance? An Empirical Analysis of Interfirm Network in Indonesia’s High-Tech Industry using Multi-Mediation Model

This study aims to determine the different effects of the multi-mediating role of innovation capability, foreign ownership, export, and royalty expense in the firm’s network on the performance of Indonesia’s high-tech firms. This study uses data from the high-tech industry with a total sample of 2,578 firms from the Indonesian Central Statistics Agency. The study results prove that there is a positive and significant effect of the Interfirm network on firm performance. The interfirm network also positively and significantly influences Innovation Capability, Export Participation, Foreign Ownership, and Royalty Expense. Innovation capability and foreign ownership as part of internal capability also positively and significantly influence firm performance both directly and as a mediator. However, external capability has a negative influence as shown by exports and royalty expenses on firm performance, either directly or indirectly, as a mediator. Internal capability has an important influence on firm performance compared to external capability. Firms should have internal knowledge transfer rather than depending on the market. Innovation capability has the best mediating role compared to other mediating variables and the best strategy that the firm can do is to implement an interfirm network strategy in maximizing the firm's performance. Thus, the study results provide input to firms in the high-tech industry to optimally utilize their interfirm network to optimize firm performance. Further research is needed to see the effect of each type of industry in the high-tech industry and outside this industry.

Welfare Effects of Smallholder Export Participation: Evidence from Panel Data in Kyrgyzstan

The involvement of small-scale farmers in markets is crucial to alleviate poverty in low- and middle-income countries. In this study, we examine the determinants and welfare implications of export participation for smallholders in Kyrgyzstan, utilising household-level panel data for the period of 2010-2013 and employing fixed-effects panel estimations. Our research reveals that the decision to participate in exports is primarily influenced by the geographical location of the farmers and their receipt of overseas remittances. Furthermore, we find no significant welfare effects from exporting when assessed using three welfare indicators. Consequently, we conclude that in the absence of organised export value chains, trade liberalisation does not yield clear welfare benefits for small-scale farmers in impoverished countries.

New Measurement of Export Participation in US Manufacturing

We measure export participation rates in the US manufacturing sector using a new administrative dataset and compare them to participation rates constructed from the commonly used census of manufacturers (CM). At both the establishment and firm levels, export participation rates are near 40 percent in the administrative data, almost twice as high as in the CM. The discrepancy appears to result predominantly from undercounting of small exporters in the CM. Our findings call for reconsidering the conventional wisdom that around 20 percent of manufacturing firms export.

Exporting and sourcing strategies

AbstractThis study uses firm‐level panel data for South Korea for the period 2006–2015, to investigate changes in firms' sourcing behaviors after these firms start exporting. The data studied includes detailed information on firms' export status, whether their purchases of intermediate inputs were domestic or from foreign markets, and whether the supplier firms were affiliated or non‐affiliated. To estimate the effects of exporting on firms' sourcing strategies, we employ a difference‐in‐differences estimator with propensity score matching. The main finding is that participation in export markets leads to the increased use of intermediate inputs purchased from foreign suppliers; it also increases these firms' sourcing from affiliated parties relative to sourcing from non‐affiliated suppliers. These changes in firms' sourcing compositions after their entry into export markets are mainly driven by purchasing rather than subcontracting. These findings point out that firms that newly participate in exporting tend to improve their product competitiveness by increasing the proportion of their intermediate inputs from foreign affiliates. It is also possible that these firms expanded their foreign networks after they begin export activities, and this plays a role in how and where they source their intermediate inputs.

Environmental information disclosure and firm export: evidence from China

In this paper, we empirically investigate how a governmental environmental information disclosure (EID) program in China affects the extensive and intensive margins of export for a panel of Chinese industrial firms. The results show that stricter enforcement of environmental disclosure discourages firms’ participation in export. However, the export volume of remaining exporting firms increases following more environmental disclosure. The results are robust to a battery of robustness checks as well as an IV estimation. Mechanism analysis reveals that firms’ propensity of innovation increases after stricter enforcement of disclosure, lending support for the Porter hypothesis.

Engaging CSR in SMEs by exporting: The critical factors of CEOs and markets

AbstractCorporate social responsibility (CSR) has recently been emphasized as an important focus area of small and medium‐sized enterprises (SMEs) for achieving sustainable competitiveness. As most SMEs have scarce resources, however, their CSR implementation has varied significantly. This study investigated why some SMEs actively engage in CSR by suggesting export participation for CSR engagement. This motive differs from the widely believed motive of SMEs for their active engagement in CSR: their relationships with their local communities. Considering the distinctive features of SMEs, this study also examined how the relationship between SMEs' exports and their CSR engagement is moderated by the influence of the SMEs' CEOs and markets. By studying the CSR activities of 614 SMEs in South Korea drawn from a survey of the Ministry of SMEs and Startups, we found that exporters are more likely to be engaged in CSR. Moreover, the relationship between export participation and CSR was stronger in SMEs with family CEOs and in business‐to‐business‐focused SMEs.