Margins Of Exports Research Articles

Heterogeneous effect of exchange rates on firms’ exports: Role of labor intensity

Using an extensive firm-level database that combines balance sheet information, social security registry and customs data, we examine whether the relationship between the exchange rate and exports change with the degree of labor-intensity of production. The results based on manufacturing firms in Türkiye suggest that the sensitivity of labor-intensive firms to the exchange rate is higher than that of the less labor-intensive ones, both at the intensive and extensive margins of exports. In addition, export product variety and export market variety of the labor-intensive firms increase more than the others during a currency depreciation. In particular, the increase in the exports of the labor-intensive firms is 2.7 percent higher than the increase in exports of the non-labor-intensive firms in case of a 10 percent decline in the real effective exchange rate. However, we do not find a significant impact on the export prices varying across the labor-intensity of the firms. Our results are robust to alternative definitions of labor-intensity and exchange rates, and the use of different time spans.

Demand Volatility and Firm Export Margins: Evidence from Egypt

The study explains the export behavior of Egyptian firms under demand volatility in destination countries using detailed customs data and high-dimensional fixed effects. It finds that demand volatility negatively affects both the intensive and extensive export margins. The effects are particularly evident for large firms which reduce their export sales — especially over time — to more volatile destinations/products, are more likely to exit from exporting more volatile products and are less (more) likely to enter (exit) more volatile destinations. These findings confirm recent literature that emphasizes the greater elasticity of large firms to foreign demand shocks. They are also in line with risk aversion models in which the average risk premium increases with firm size. Given the disproportionate adverse impacts on large exporters, we find that higher demand volatility leads to lower aggregate exports, especially to geographically close and low trade costs countries. Accordingly, uncertainty in demand lessens the positive effect of lower trade barriers on exports.

Intensive and Extensive Margins of Export Diversification as Strategies for Sustainable Economic Growth: Evidence from the Nigerian Economy

Two opposite strands of literature analysing export diversification’s role in promoting sustainable growth have evolved in international economics and development, namely, the intensive and extensive margins of exports. This study empirically investigates which of the margin is more useful towards promoting sustainable growth using annual time series data of Nigeria for the period 1960–2021. Autoregressive distributed lag (ARDL) and innovative accounting procedure were employed. The ARDL results reveal that both margins significantly enhance growth in short and long run. However, importance of the extensive margin, in aggregate, dominates that of the intensive margin. Likewise, the results from innovative accounting procedures reveal that although both margins contribute positively to growth, the contribution to growth of extensive margin dominates over that of the intensive margin. These results, thus, lend credence to the extensive-margin exposition, which postulates that the export of extant commodities to new market destinations or export of new commodities to new and/or old market destinations plays a relatively more important role in export growth/diversification and, ultimately, sustainable growth. The study recommends that governments should develop and implement economic policies aimed at enhancing exports of value-added commodities—due to their relatively high income and price elasticities over primary commodities—to maximise the benefits in the extensive margin. JEL Codes: F10, F14, O10, O12, O50, O55

Firm size‐specific trade effects of regional trade agreements: Estimating extensive and intensive margins of trade

AbstractWe estimate the impacts of Korean firms’ participation in regional trade agreements (RTAs) on the extensive and intensive export margins by identifying exporting firms based on their firm size—small and medium‐sized enterprises (SMEs) and large enterprises (LEs) at the 5 399 HS six‐digit commodity level—and specifying characteristics of RTAs from 2004 to 2015. We apply the EK Tobit estimation technique to control zero trade and the OLS estimation with importer‐product and time fixed effects to alleviate the endogeneity problem. We find that firm size, product type, and depth of RTA significantly matter. Specifically, we find that deeper RTAs with larger, developing, and closer members significantly enhance the export creation effects of SMEs and LEs. Regarding the firm size‐specific effects, we find that SMEs are less sensitive to exploiting RTA participation but more sensitive to the import market size, bilateral and relative trade costs, and the RTA characteristics. LEs’ export creation is mainly driven by the intensive margin, while SMEs’ export creation is driven by extensive and intensive margins (slightly more by the extensive margin). For the product‐specific effects, we find that Korea's major exportable products such as chemicals, basic metals, motor vehicles, and transport equipment generate significantly strong export creation effects for both LEs and SMEs through their participation in RTAs.

Export Boosting Policies and Firm Performance: Review of Empirical Evidence Around the World

Abstract How effective are government policy attempts to boost firm exports in the short-run? We answer this question by conducting a review of 33 studies from 26 countries around the world, and provide nine findings. Export boosting policies are defined as a group of public policies that aim to increase firm exports in the short-run. These include policies such as export promotion, export-oriented public grants, public export guarantee schemes and subsidised export loans. Our review provides insights into policy effectiveness with respect to extensive and intensive export margins, as well as firms’ production function inputs and its outputs. The heterogeneity of effects across firm characteristics is emphasised, and the discussion is enriched with new evidence of spillover effects from export boosting policies. Finally, we summarise back-of-the-envelope calculations of the cost-benefit analysis and provide recommendations for future research.

Intensive and Extensive Margins of Export: Determinants of Economic Growth in Russian Regions under Sanctions

The impact of foreign trade on the Russian economy’s growth remains debatable. In 2014, the economy faced initial sanctions, leading to export restructuring and affecting growth. In 2022, a second unprecedented wave of sanctions necessitated export restructuring and intensified the challenge of sourcing economic growth. This study evaluates the impact of intensive and extensive export margins on Russian regions’ growth from 2015 to 2021 and discusses post-2022 implications. It is hypothesised that new export goods and markets are vital for economic growth in Russian regions. The study shows that both intensive and extensive margins are positively related to the level of development in Russian regions, and developed regions with diversified economic structures had higher values of export margins. The methodology uses panel regression with random and fixed effects. The empirical results show Russian regions’ market share in the products they export and in the countries where they export (i. e. intensive product and geographic margin) is important for the economic growth of Russian regions, while the results for extensive margin are ambiguous. The obtained findings have implications for industrial policy, which should prioritise the development of measures aimed at supporting existing exporting companies in expanding their presence in familiar markets. The task of export diversification should primarily be addressed through working with existing exporters and export products, while the export of innovative products should be viewed as a gradual evolutionary process within the framework of long-term planning.

The Impact of U.S. Trade Policy Uncertainty on the Trade Margins of China’s Export to the U.S.

Since the subprime crisis, the U.S. has begun to adjust its international trade policies due to the worldwide economic slowdown, leaving its trading partners facing great uncertainty in trade policy. In this study, we developed a panel model to empirically analyze the impact of U.S. trade policy uncertainty on the extensive margin, intensive margin, price margin, and quantity margin of Chinese exports of U.S. goods. We found that U.S. trade policy uncertainty is also a trade barrier for China’s export trade. The extensive margin, intensive margin, price margin, and quantity margin of Chinese exports to the U.S. are all adversely connected with U.S. trade policy uncertainty. The increase in U.S. trade policy uncertainty significantly inhibits the increase in the extensive margin, intensive margin, and quantity margin of China’s exports to America, and the degree of inhibition of the quantity margin is five times that of the extensive margin. Increased U.S. trade policy uncertainty also restrains the increase in the price margin of Chinese exports to America, but this is not statistically significant. In this study, we emphasize the significant impact that U.S. trade policy uncertainty has had on the trade margins of Chinese exports of goods to America. To stabilize China’s exports to the United States, China should increase support for export enterprises’ technological R&D and innovation, expand bilateral or multilateral free trade agreements with other countries, and so on.

The Value of Managers' Export Experience: Lessons from the Angolan Civil War

Abstract We investigate how managers help firms grow by entering a new export market. We conduct an event study on the decision to export to Angola using data on Portuguese firms and workers. We evaluate the impact of the presence of managers with experience in exporting to the Angolan market on a firm's entry success in the aftermath of an exogenous shock: the sudden end of the Angolan civil war. We show that the presence of managers doubles the probability of a firm entering the market. We do not find any significant impact on the intensive margin of 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.

Policy-based Loans to Korean SME Exporters and the Intensive Margin of Exports

Policy-based Loans to Korean SME Exporters and the Intensive Margin of Exports

Does the internationalisation of China's agri‐food standards affect export quality upgrading?—Evidence from firm‐product‐level data

AbstractChina attaches importance to the development of standards in agri‐food sectors, especially the harmonisation of national standards with international standards. Our study matches agri‐food product standards and firm‐product customs data for the period from 2000 to 2015. We perform an empirical analysis using the ‘distance to the frontier’ model to identify the effects of the internationalisation of China's agri‐food product standards on the quality upgrading of firms' exported products. The results suggest that when Chinese standards are harmonised with international measures, there is a significant positive impact on quality upgrading. In addition, this international standards–quality relationship is nonmonotonic; that is, firm‐level products that are far from the quality frontier are more likely to upgrade quality in response to an increase in standards. Conversely, national standards have not demonstrated good trade performance and have no significant quality‐promoting effect on firms' export products. These results are robust to various checks. Moreover, the heterogeneous effects further suggest that the positive correlation between international standards and quality upgrading is even stronger for modified versions of international standards, in smaller‐sized firms and foreign‐invested firms. Finally, the quality upgrading effects of international standards induce an increase in both the extensive and the intensive margins of firms' exports.

Fruit safety regulations in the transatlantic region: How are Africa’s exports faring with the regulations?

The regulations of fruit trade for safe consumption are taken seriously in the EU and US markets to protect the health of the consumers, animals, plants and environmental safety, and thereby reduce health expenditures. The fruit safety regulations as trade policy measures could be either trade-promoting or -impeding. The extensiveness and intensiveness of fruit safety regulations in these markets often have consequences for exporters from Africa and their desire to attain sustainable economic development. The effects of fruit safety regulations are heterogeneous across economic agents. To this end, many stakeholders in Africa’s food system have perceived compliance with these food regulatory measures as necessary conditions to access the developed countries’ markets, particularly in the EU and US. Besides, the competitiveness of Africa’s fruit exports has been impacted by the preponderance of the measures despite its comparative advantages in the fruits sub-sector. Therefore, this study aims to investigate the impact of the EU and US sanitary and phytosanitary measures on Africa’s fruit exports. The empirical strategy involves the use of an augmented gravity model which explore the disentangling of these impact at the extensive and intensive margins of exports. Given the nature of trade data and specifically for this study, the zero trade flows are considered at both margins of exports for 45 African countries from 1995 to 2017. This study finds that the US market is more trade-impeding to Africa’s fruit exports than the EU market. Thus, Africa needs policies tweaking in the fruit value chain quality infrastructure, fruits’ quality and standards enforcement, capacity development, continuous update and modernisation of the fruits’ safety laws, directives and/or regulations. This will enhance the fruits’ quality to propel their access to the transatlantic markets.

State export financial support of brazilian manufactured products : a microeconometric analysis

We investigate the impact of Brazilian state financing to exports – Proex, Exim and Drawback – on the performance of firms in foreign trade between 1998 and 2007. We focus on the (i) risk of abandonment of export activity; (ii) number of destinations; and (iii) export value. Through a quasi-experiment with a unique dataset of Brazilian firms entering foreign markets, we find a positive relationship between export programs and the intensive and extensive export margins, as well as with persistence in international trade, although not all three programs are effective. Supported firms had their chance to keep exporting augmented between 4% and 13%, increasing their number of destinations by up to 43% and the export value between 74% and 90%. The results suggest that financial constraints may limit the export potential of firms and highlight the importance of the government’s export promotion policies, mainly in developing countries which systematically suffer from credit market failures.

Internet and firms’ exports and imports: Firm level evidence from China

AbstractThis study investigates the impact of the Internet on Chinese firms' export and import performance by using China's industrial enterprise and customs data and adopting a propensity score matching difference‐in‐differences method (PSM‐DID). The empirical results show that utilising the Internet has positive effects on firms' exports and imports; however, the effects are mainly concentrated in the first 2–3 years. The positive effect on exports is larger than on domestic sales; thus, the Internet increases export intensity. Further, we investigate the effects of the Internet on the three margins of Chinese exports. First, we borrow the multi‐product multi‐destination firm exporting theory developed by Bernard et al. (The Quarterly Journal of Economics, 126, 2011, 1271) and find that the Internet improves not only the extensive margin between firms, but also the within‐firm extensive margin. We then investigate the effects of the Internet on product quality and find that the Internet has a negative effect since Chinese firms export more products to developing countries than to other countries, where the requirements for product quality are relatively low. Our findings empirically justify the ‘Internet Plus’ strategy proposed by the Chinese government with regard to international trade.

Robot adoption and export performance: Firm-level evidence from Spain

Export activities are crucial for firm performance. Existing evidence shows that technology adoption is an essential determinant of firm competitiveness. Nevertheless, scarce attention has been devoted to robotisation, a new technology that firms increasingly adopt. We investigate the effect of robot adoption on the intensive and extensive margins of exports of Spanish manufacturing firms over the period 1990–2014. We combine the propensity score matching (PSM) and difference in differences (DID) techniques and find that firms adopting robots experience a sharp increase in their export probability, export sales and share of exports in total output. This result persists after a wide array of robustness checks, including the use of instrumental variables. Robot adoption favours export entry and survival and fosters the export activity of intermediate goods’ producers. The positive impact of robot adoption on exports is driven by its positive effect on firm total factor productivity, product innovation and importing.

The Interactive Impact of Trade Policy Uncertainty and Credit Constraint Heterogeneity on Firms’ Export Margins: Theory and Empirics

Abstract This paper develops a simple trade model of heterogeneous firms, which incorporates the dual heterogeneity of credit constraints at the firm and industry levels and reveals the effects of the interaction mechanisms of trade policy uncertainty and credit constraint heterogeneity on exporters’ behaviour. The model confirms that the higher the level of industrial credit constraints, the greater the interaction of trade policy uncertainty and credit constraint heterogeneity, but firms with lower levels of credit constraints within a specific industry are more affected by this interaction. Then, based on the highly dis-aggregated trade data of China’s firms from 2000 to 2013, this paper provides empirical evidence for the main predictions and mechanisms of the theoretical model.

The Effect of Bilateral Investment Treaties (BITs) on the extensive and intensive margins of exports

This paper investigates the effect of BITs on the extensive and intensive product margins of exports, utilizing ordinary least squares (OLS) and Poisson pseudo-maximum-likelihood (PPML) estimator with fixed effects approaches to estimate the gravity equations. The model in this paper theoretically demonstrates that investment liberalization increases the extensive margin by lowering the variable costs of selling abroad, but decreases the intensive margin by lowering both the fixed investment costs and the variable costs. Using a detailed dataset of 210 countries/regions from 1988 to 2006, this paper provides empirical evidence that BITs promote exports. This paper also empirically supports the theoretical propositions that BITs increase the extensive margin of exports from developed countries while decreasing the intensive margin of exports.

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.

The role of productive and technological capabilities in export dynamics in developing countries

Productive and technological capabilities are major engines of export. But how they affect export behaviour at the microeconomic level is less clear and many questions remain. This paper empirically investigates their role in export dynamics in 40 developing countries. The analysis shows that, within sectors, countries with greater productive capacities have more exporters, and the exporters are larger and charge higher prices for their products. The results also confirm a positive relationship between technological capabilities and diversification: within sectors, exporters in countries with stronger capabilities tend to export a higher number of products and to more destination markets. Lastly, technological capabilities also play a specific role in the diversification of products and market destinations of high-technology sectors. Thus, even comparing exporters’ behaviour only among developing countries, productive and technological capabilities are found to be strongly related to the extensive and intensive margins of exports, and to diversification and product quality.

EU cross-border carbon tax: risks for Russian metallurgy

Subject of the analysis is the EU initiative of introducing the Carbon Border Adjustment Mechanism, developed within the framework of the «European Green Deal» adopted in 2019, and its possible impact on the Russian iron & steel industry. Special attention is paid to the assessment of the risks of the Russian iron & steel industry in the event of the introduction of a Carbon Border Adjustment Mechanism, including issues of competitiveness and export niche in the EU market. Forecasts of direct financial losses of exporters in the form of reduction or disappearance of export margins, as well as possible indirect losses in the event of export termination are given. The impact on this perspective of the dynamics of the price per unit of reduction of greenhouse gas emissions in the European carbon market is tracked and a forecast of their possible increase in the near future is given. A comparative analysis of the sensitivity of products of the first and second processing stages in the ferrous metallurgy to cross-border carbon taxation in Russia and its leading competitors in the EU market, including certain technological barriers for reducing greenhouse gas emissions at Russian metallurgical enterprises, is carried out. Forecasts of the possible effect of a Carbon Border Adjustment Mechanism in the form of the European steel market resharing are evaluated.