Firm-level Export Research Articles

Heterogeneity and nonlinearity in the relationship between rediscount credits and firm exports

Export credits are used extensively throughout the world to temper the negative effects of financial constraints on exports. In this paper, we focus on a particular form of subsidized export credits, namely, an export rediscount credit program implemented by the Central Bank of the Republic of Türkiye. For this purpose, we create a detailed firm-level data set that matches monthly firm-level export data with credit and financial statement data. Our results show that exports by firms that use rediscount credit increase significantly over a six-month horizon and that the amount of credit and export growth have a positive relation. Moreover, the relation between the credit amount and export volume is not linear; the correlation starts to decline after a certain point. Our results also reveal heterogeneity with respect to size: exports increase more after using rediscount credit for small firms than large firms.

The Heterogeneous Impact of Market Size on Innovation: Evidence from French Firm-Level Exports

Abstract We analyze how demand conditions faced by a firm in its export markets affect its innovation decisions. We exploit exogenous firm-level export demand shocks and find that firms respond by patenting more; furthermore, this response is driven by the subset of initially more productive firms. The patent response arises two to five years after the shock, highlighting the time required to innovate. In contrast, the demand shock raises contemporaneous sales and employment for all firms regardless of their productivity. This skewed innovation response to common demand shocks arises naturally from a model of endogenous innovation and competition with firm heterogeneity.

Is Service Orientation Benefitting Manufacturing Exports from Low-Middle Income Countries? Firm-level Empirical Evidence from WBES Data

Servicification of manufacturing, generally understood as the increasing use of service inputs in the production process of goods, is often associated with high-income countries. Recent empirical research on servicification and its impact on manufacturing exports across low-middle income countries is, however, relatively scarce. The current article empirically tests the servicification for low-middle income countries using the World Bank Enterprise Survey (WBES) database over 2006–2021. A fixed effect model with country-sector-year fixed effects is used to study the impact of servicification on existing exporters (intensive margin), and a Logit model is estimated to determine the corresponding impact on the decision to export (extensive margin). While the positive influence of servicification on manufacturing exports is confirmed, different service categories (e.g., transport & communication, information & technology, research & development, legal, finance and related services) are found to play an essential role in determining the decision to enter the export market, while leaving a weaker impact on existing exporters. The findings suggest that increasing the use of different categories of service inputs may differently influence firm-level export behaviour. Liberalization of services, in the era of Industry 4.0, is expected to further enhance this interlinkage. These inevitable dynamics require preparations by firm-level decision-makers to benefit from the emerging opportunities.

The link between import sources and export success: Evidence from China

This paper investigates the role of intermediate input sources in explaining firm-level export patterns. To establish a causal link, I exploit China’s accession to the WTO in late 2001 to construct destination-specific instruments for the import intensities of Chinese manufacturing firms from 2002–2006. I show that firms which import a greater portion of intermediates from a particular country tend to earn a greater portion of product export revenue from said country. This effect is stronger for smaller (less productive) firms than for larger (more productive) ones, for private and foreign firms than for state-owned enterprises, and for products with greater scope for differentiation. The findings suggest that cost complementarities in accessing foreign markets – in addition to quality and technology upgrading – play a significant role in determining firm-level trade flows.

The negative impact of disintegration on trade: The case of Brexit

Using firm-level export and import transactions and by applying an event study methodology, we quantify the impact of the UK’s withdrawal from the EU’s single market and customs union on Spain–UK trade flows. We find that Spanish exports and imports to the UK decreased by 24% and 27%, respectively, compared to the period before the Brexit referendum. The probability of Spanish exporters and importers starting a trade relationship with the UK decreased and the probability of ending one increased. Products subject to sanitary and phytosanitary measures, stringent rules of origin, and whose technical standards had not been harmonized before disintegration experienced a stronger decline in trade flows. Large firms faced a more severe decrease in exports than small ones after disintegration.

Top exporters and regional export specialization

<p>We examined the role of top exporters in sub-national export specialization using Spanish firm-level export data at the province (NUTS 3) level. Our results show that, on average, 28% of aggregate exports in each province are in sectors where the top exporter determines the revealed comparative advantage (RCA). Moreover, provinces with sectors where the top exporter determines the RCA exhibit a more unstable pattern of export specialization over time. This result suggests that the characteristics and strategies of large firms may affect regional specialization patterns.</p>

Exporters under foreign heat

Abstract In this article, I estimate the effect of foreign weather shocks on firm-level exports, exploiting the French firm-level customs data from 1995 to 2009. I find support for a small, negative impact of foreign temperatures on average but estimate a robust and strong differential effect across exporters, leading to composition changes. Larger firms are more negatively harmed by foreign weather shocks than small exporters. Regarding mechanisms, demand-side mechanisms (such as import demand changes) are mainly at play, whereas I find no evidence for supply-side (competition) mechanisms.

Can Online Platforms Promote Women-Led Exporting Firms?

Abstract How can policymakers promote women-led exporting firms? In this paper, we study the role of online business platforms to reduce informational barriers to exporting for women entrepreneurs. We hypothesize that, if the costs associated with accessing digital platforms are more symmetric across gender than traditional trade costs, digital trade platforms can play an important role in making trade more gender equal. To assess this hypothesis, we combine information on firms’ participation in ConnectAmericas, a free and purely informational online platform, and detailed firm-level export data of a developing country over a long period. We find that participation in this platform is associated with a significantly larger increase in exports for women-managed firms than for men-managed firms in otherwise identical products and destinations. Given existing evidence on the role of women-managed businesses in reducing gender earnings inequality, these results suggest that policies which encourage women participation in online environments, to reduce the informational barriers associated with operating in foreign markets, have the capacity to promote gender equality more broadly.

Adjustments in markups after a Free Trade Agreement: An analysis of Pakistani firms gaining increased access to China

ABSTRACT Increased market access through trade liberalization can affect the markups, prices, and marginal costs of exporters. Understanding these dynamics is critical for firms and policymakers, particularly as they formulate export strategies. We examine the impact of China lowering tariffs on Pakistani products under the Pakistan–China Free Trade Agreement (FTA), which gave Pakistani exporters greater market access. Using disaggregated output and price data for textile manufacturers in Punjab, Pakistan, we estimate product-level markups and marginal costs using the methodology of De Loecker, Goldberg, Khandelwal, and Pavcnik (2016) [“Prices, Markups, and Trade Reform.” Economterica 84 (2): 445–510]. We then extend this to the firm level by using the methodology of De Loecker and Warzynsksi (2012) [“Markups and Firm-Level Export Status.” American Economic Review, 2437–2471]. We find that Pakistani firms exporting to China followed a dynamic pricing strategy by reducing prices to compete with global competitors in the Chinese market. We also find evidence of a decrease in marginal costs as a result of reductions in X-inefficiencies. But because Pakistan's exports to China are relatively homogeneous, the extent of quality differentiation and markup margins was limited. Finally, we find evidence of pro-competitive effects.

The impact of export VAT rebate reduction on firms' pollution emissions: Evidence from Chinese enterprises

This study investigates firm-level environmental responses to China's export value-added tax (VAT) rebate reduction policy launched in 2007 that aims to reduce exports in high-polluted and high-energy-consumption sectors. First, we combine firm-level export information from the Customs dataset and the list of policy-targeted products to identify firms affected by export VAT rebate reduction policy. Then, we employ a difference-in-differences strategy to examine changes in the affected and unaffected firms' sulfur dioxide and chemical oxygen demand emissions before and after policy implementation. Empirical analysis reveals that the export rebate reduction policy increases firms' pollution emission intensities and decreases their total outputs, leading to a negative but less significant effect on total pollution emissions. Tests to explore the mechanism reveal that firms' financial constraints become tighter if affected by the export VAT rebate reduction, as evidenced by reduced revenues, profits, and total factor productivity. This further translates into lowered purchases of environment-friendly technologies and a worse capacity to adopt clean production practices, which accounts for increased pollutant emission intensities following the export VAT rebate reduction policy.

Global Payment Disruptions and Firm-Level Exports

Global Payment Disruptions and Firm-Level Exports

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.

The More the Merrier? Evidence from Firm-Level Exports and Environmental Performance in China

The More the Merrier? Evidence from Firm-Level Exports and Environmental Performance in China

Effects of Business-Group Affiliation Overseas Investment and Technology on Firm-level Export Intensity: Evidence from Indian Automotive Component Industry

Based upon a sample of 78 firms operating in Indian automotive component industry for the period 2000–2018, this research empirically examines the role of business-group affiliation, overseas investment and technology in determining exports. It applies panel Tobit and Probit model estimated with the maximum likelihood estimator. This research finds that technology imports, firm’s age, overseas investment and affiliation to a business group significantly affect industry’s export performance. However, some variables, such as past R&D intensity, firm’s size and companies with overseas investment and being part of a group have been found to have had a detrimental effect. All these results show that being outward-oriented in terms of overseas investment and being affiliated with a business group makes a significant difference concerning export success.

Markups, quality, and trade costs

This paper examines how trade costs induced by geographic distance or bilateral tariffs impact the markups of exports differentiated by quality. It relies on a data set that combines Argentinean firm-level wine exports with experts’ wine ratings as a measure of quality. Exporters price discriminate across destinations by raising markups in more distant markets, and by lowering them in high-tariff countries. However, the response of markups to changes in trade costs is heterogeneous and weaker for higher quality exports. These empirical patterns can be predicted by trade models featuring demand functions more convex than log-concave, but less than superconvex. They demonstrate that the variation in firm-level export unit values across markets is not only driven by quality differences but also by markup variation conditional on quality.

How productivity and credit constraints affect exports differently? Firm-level evidence from China

This paper aims to differentiate between the impacts of a firm’s productivity and credit constraints on its export behavior. Based on the different channels through which these two factors influence firm exports, we propose three main hypotheses. First, credit constraints exert a larger impact on export extensive margin than on export intensive margin. Specifically, credit constraints influence the number of export destinations more than the average export value for each destination. Second, productivity has a stronger effect on intensive margin, relative to its effect on extensive margin. That is, productivity exerts greater influence on the average export value than on the number of export destination countries. Third, in aggregate, productivity plays a more important role in a firm’s total export value, compared with credit constraints. We verify the above hypotheses using the firm-level export data in China from 2000 to 2007.

Political Beta

Abstract Using a portfolio theory framework, we introduce the concept of “political beta” to model firm-level export diversification in response to global political risk. Our model predicts that firms are less responsive to changes in political relations with lower beta countries—those that contribute less to the firm’s total political risk. We document patterns consistent with our model using disaggregated Russian firm-by-destination-country data during 2001–2011: Trade is positively correlated with political relations, though the effect is far weaker for trading partners whose political relations with Russia are relatively uncorrelated with those of other partners in a firm’s export portfolio.

How information and communication technologies affect intensive and extensive margins of firm exports: Evidence with micro data of South Asian manufacturing firms.

International trade plays a pivotal role in growth and development. The use of ICT is profoundly changing the landscape for international trade and expands opportunities especially for developing countries. The key objective of this study is to investigate the effects of different ICT capacities on the extensive and intensive margins of firm-level exports using micro-data of manufacturing firms operating in selected South Asian countries. We employ the Probit and fractional response models as estimation techniques. Findings of the study reveal that different ICT capacities are positively associated with both the extensive and intensive margins of firm-level exports, and our results are robust to the alternative empirical specifications. These results have important implications for designing the export promotion policies in selected South Asian countries. Hence, policy practitioners in these countries should encourage firms to invest in ICT capacities to boost their export performance.

재생에너지기업의 수출시장 선택 영향요인 분석

The study investigates the question of how firms’ external factors affect their selection of export market using survey-based data for 252 renewable energy technology firms in Korea. Considering the situation and reality where each country, including Korea, employs policy mix to promote renewable energy technology industry, firms are actual beneficiaries and core economic entities of export, and renewable energy technology market is growing, we established a binary logistic regression model to test the effects of public policies(renewable energy industrial policy, environmental policy, and export promotion policy), social acceptance, trade association support, market attractiveness, and inter-firm competition on firm-level export. After confirming the reliability and validity of the items to measure each construct, we test the relationships between the variables to be examined. This study shows the Korean renewable energy technology firms’ export is affected mainly by two public policies and industry factor, environmental policy, export promotion policy, and supports of trade association. However, renewable energy industrial policy, social and market factors(social acceptance, market attractiveness, inter-firm competition) do not significantly affect firm-level export. We propose policy implications based on the results of the study, and list the limitations that should be addressed in future research.

Exchange rate fluctuations, volatility and exports: The intensive margin effect for Turkish firms*

We estimate an augmented gravity model using a firm-level database on Turkish firms to revisit the trade-exchange rate relationship over 2003–2015 at the intensive export margin. Besides several additional layers of analysis made possible by unique attributes of our firm-level database, we also examine exchange rate effects separately for firms engaged in manufacturing and services-intensive activities, which differentiates us from existing literature. A depreciation of the Lira is found to be associated with an increase in the quantity of Turkish exports, irrespective of firm ownership or size, though the effect is found to be muted for manufacturing firms in the sample that are more reliant on imported intermediates. Meanwhile, exchange rate volatility is found to be adversely associated with firm-level exports, especially for the sample of services-intensive and foreign-owned firms, irrespective of whether the Lira appreciated or depreciated. Finally, while the results display significant heterogeneity across sectors, at the regional level, they are driven by the location of production/export hubs in Turkey, namely İstanbul in Marmara, Ankara in Central Anatolia and İzmir in Aegean.