Export Participation Research Articles

Prediction of Export Participation Based on Firm Heterogeneity: Time Series Classification with Deep Learning

Prediction of Export Participation Based on Firm Heterogeneity: Time Series Classification with Deep Learning

Trade-Policy Dynamics: Evidence from 60 Years of U.S.-China Trade

We study the growth of Chinese imports into the United States from autarky during 1950-1970 to about 15 percent of overall imports in 2008, taking advantage of the rich heterogeneity in trade policy and trade growth across products during this period. Central to our analysis is an accounting for the dynamics of trade, trade policy, and trade-policy expectations. We isolate the lagged effects of past reforms and the current effects of uncertainty about future reforms. We build a multi-industry, heterogeneous-firm model with a dynamic export participation decision to estimate a path of trade-policy expectations. We find that being granted Normal Trade Relations (NTR) status in 1980 was largely a surprise and that, in the early stages, this reform had a high probability of being reversed. The likelihood of reversal dropped considerably during the mid 1980s, and, despite China's accession to the World Trade Organization (WTO) in 2001, changed little throughout the late 1990s and early 2000s. Thus, although uncertainty depressed trade substantially following the 1980 liberalization, much of the trade growth that followed China's WTO accession was a delayed response to previous reforms rather than a response to declining uncertainty.

Firm heterogeneity in services trade: Micro‐level evidence from eight OECD countries

AbstractThis paper shows that smaller and less productive firms, as well as first‐time exporters, are overproportionally affected by services trade barriers using micro‐data from Belgium, Finland, Germany, Italy, Japan, Sweden, the United Kingdom and the United States. For these firms, both the propensity to export and export volumes to less restrictive destinations are significantly higher than to more restrictive destinations. In contrast, policy barriers measured by the OECD Services Trade Restrictiveness Index (STRI) do not affect export decisions of the largest, most productive and experience services firms. The pattern holds for two major modes of supply, cross‐border services exports and foreign affiliate sales of services firms. The findings are consistent with firm sorting mechanisms in trade models with heterogeneous firms and hysteresis of export participation in the presence of sunk export costs.

Financial constraints and the export decision of Pakistani firms

AbstractThe payment of sunk costs associated with the entry to foreign export markets highlights the significance of financial dimension in the firm decision. The sunk costs become a challenge for the financially constrained firms. In this paper, we study the relationship between financial constraints and the export entry decision of the firms in a lower‐middle income country context. We use new measures of financial constraints in finance literature alongside widely used measures of financial health in trade literature to scrutinise the relationship for Pakistani listed manufacturing firms. We find that being less financially constrained is a vital determinant of the Pakistani firms' export participation decision irrespective the high firm leverage before entry. The undeveloped financial system and heavy reliance on bank loans for external finance in Pakistan may be the plausible explanations for our findings. Our results suggest that measures of financial constraints are more appropriate than the widely used measures of financial health in studying the determinants of the export participation decision. In addition, we find evidence that future exporters improve their financial conditions prior to entering the export markets. However, we do not find any evidence that exporting improves financial conditions of the firms after entry.

Transaction costs and participation in avocado export marketing in Murang’a County, Kenya

PurposeThe purpose of this paper is to investigate the role of transactional costs on smallholder avocado farmers’ participation in the export market and the extent of participation in Murang’a County, Kenya.Design/methodology/approachData was collected from 384 avocado farmers in Murang’a County, following stratified sampling. The Heckman two-stage model was used for analysis.FindingsResults showed that the cost of information search was an important variable that impedes smallholders’ participation in export marketing while harvesting costs inhibits the extent of participation in export marketing.Research limitations/implicationsThis study used data at the farm level. Therefore, insights on transaction costs among other marketing agents in the export market value chain would be an issue for future studies.Originality/valueFollowing the debate on transaction costs and market participation among farmers in Sub-Sahara Africa, this paper models transactional costs and export market participation among avocado smallholders and measures the extent of participation with the inclusion of harvesting costs, negotiation costs, monitoring costs and information search costs that are not common in previous studies, thus contributing to the development of literature.

Growth of micro and small scale enterprises and its driving factors: empirical evidence from entrepreneurs in emerging region of Ethiopia

PurposeThe purpose of this study was to examine micro and small scale enterprises’ growth determinants operating in Benishangul-Gumuz Regional State of Ethiopia as emerging region.Design/methodology/approachThe study adopted an explanatory research design with arrangement of primary data collection via a cross-sectional survey questionnaire followed by mixed research approach. The sample of this study was 220 enterprises determined by Yamane’s formula and selected using proportional stratified random sampling technique.FindingsThe result of regression analysis revealed that initial investment, access to land, access to finance, location, sectoral engagement, market linkage, and business experience are significant in explaining growth in one hand. On the other side, however, gender, education, ownership, formal recording, and financial management practice are found to be insignificant variables in determining enterprises’ growth.Research limitations/implicationsMore evidence is needed on micro and small scale enterprises’ growth determinants before any generalization of the results can be made. In addition, the empirical tests were conducted only on 220 entrepreneurs since 2018. Therefore, the results of the study cannot be assumed to extend beyond this group of entrepreneurs to different study periods.Practical implicationsThe study might help the entrepreneurs in addressing the factors affecting growth to take actions toward developing their performance and in turn contribute to employment, export participation, poverty alleviation, and women empowerment.Originality/valueThis paper adds to the literature on the determinants of micro- and small-scale enterprises’ growth. In particular, it tests the impact of initial investment, access to land, access to finance, location, sectoral engagement, market linkage, business experience, education, ownership structure, and financial management practice on growth of enterprises.

How did China's WTO entry affect U.S. prices?

We analyze the effects of China's rapid export expansion following its WTO entry on the U.S. prices of manufacturing goods between 2000 and 2006, exploiting cross-industry variation in trade liberalization. Lower input tariffs in China lowered costs and, in conjunction with reduced U.S. tariff uncertainty, expanded China's export participation. WTO entry therefore led to lower effective prices for Chinese exports, and we find a substantial reduction in the prices of other countries selling to the U.S., too. The largest contribution to the overall price reduction comes from lower inputs tariffs in China, with further price reductions caused by the reduction in tariff uncertainty. Other policy reforms such as the elimination of U.S. quotas under the Multifibre Agreements and of Chinese export controls also reduced prices.

Cash-in-advance, export decision and financial constraints: Evidence from cross-country firm-level data

This paper investigates the relationship between Cash In Advance (CIA) and firms’ export participation, particularly in the presence of financial constraints. Using the firm-level data covering 56 countries for the period from 2006 to 2010, we detect the positive correlation of the employment of CIA and the export participation of small and medium-sized firms only. This correlation becomes more prominent for severely credit-constrained firms. One possible explanation is that CIA raises the export possibility of small and medium-sized firms by ameliorating credit constraints while it plays no role in large-sized ones.

Investment in Knowledge‐Based Capital and Productivity: Firm‐Level Evidence from a Small Open Economy†

This paper examines the responsiveness of firm productivity to investment in knowledge‐based capital (KBC) including a range of intangible assets such as research and development (R&D), intellectual property assets, computer software, organizational, and branding capital. A dynamic econometric model is estimated with micro‐data from Ireland over the period 2006–2012. Ceteris paribus, the estimated average elasticity of productivity with respect to investment in KBC per employee is 0.3. In comparison to previous empirical studies, this paper goes beyond the representative firm approach and accounts for the heterogeneous behavior of firms which differ by ownership, size, export participation, and sector of activity. Further, the analysis finds that investing simultaneously in multiple KBC assets has complementary as well as substitution effects on firm productivity, with different interdependence patterns for specific investment combinations across groups of firms and sectors.

The macroeconomic impact of NAFTA termination

AbstractUS President Trump has threatened to leave the North American Free Trade Agreement. How much would each member country gain or lose if this threat were carried out? Would trade imbalances within the region diminish? What would the transition to new production and consumption patterns look like? I provide quantitative answers to these questions using a dynamic general equilibrium model with a multi‐sector input–output production structure, heterogeneous firms that make forward‐looking export participation decisions, and adjustment frictions in trade and factor markets. Regional trade flows would fall dramatically, and while the US trade deficit with Canada would decline, the deficit with Mexico would grow. Welfare would fall by 0.04%, 0.12%, and 0.2% in the United States, Canada, and Mexico, respectively, and transition dynamics would significantly affect welfare in both the short run and the long run.

The effects of export and R&D strategies on firms’ markups in downturns: The Spanish case

ABSTRACT The Spanish economy was one of those most hit by the Great Recession in the euro area. It suffered a huge decrease in gross domestic product (GDP), affecting especially internal demand, and in business and enterprises’ research and development (R&D) expenditures, but experienced an important increase in exports as regard to the precrisis years (the so-called Spanish “miracle”). The incorporation of Spanish small and medium enterprises (SMEs) into exports has been spectacular since 2008. Further, this has coincided with a drop in markups (stronger for SMEs). Our main objective is uncovering whether SMEs’ export and R&D participation strategies have aided in offsetting their fall in markups. We found that exporting helps SMEs to balance the decrease in markups, especially in downturns, and increases the likelihood to continue in operation. To the contrary, financial constraints and recessive demand have a negative impact on SMEs’ continuing prospects. Finally, we found evidence that SMEs’ export participation was a response to the fall in domestic demand (the “venting out” hypothesis).

Foreign sourcing and exporting

AbstractThe aim of this paper was analysing the role of sourcing intermediate inputs internationally on export decisions and distinguishing whether intermediates are sourced from firms belonging to the same business group or from independent suppliers. To analyse firms' export decisions, we use a specification that also accounts for sunk costs and accumulated experience in export markets (i.e., export market learning). We consider that importing intermediates might have direct and indirect effects (operating through enhanced productivity) on the export participation decision. The direct effects on exporting are isolated once we control for productivity and the effects of belonging to an international group. We use a manufacturing panel data set drawn from the Spanish Survey on Business Strategies (ESEE) for the period 2006–14. Both productivity and inward or outward FDI increase the probability of exporting. Moreover, our results uncover the existence of sunk costs and export market learning, and also the relevant role played by intermediate imports in firms' export choices. Their effects act both through the (indirect) channel of enhancing firms' productivity and through a direct effect related to product upgrading, more competitive selling prices or learning from the firm's import experience.

The Industrial Sector Participation in Global Value Chains for Sustainable Development of the Greater Mekong Subregion (GMS)

This study analyzes and investigates factors influencing the export of industrial sectors of the Greater Mekong Subregion (GMS) countries. These factors can clarify whether the industrial sector of GMS countries that are involved in international trade can reach or be linked to the sustainable development goals (SDGs) under the United Nations (UN). The data used in this study is the firm-level data from the World Bank Enterprise Survey. Results from a Tobit model indicate that firm size, access to finance, license from foreign firm, research and development, website availability and skilled labour are important factors contributing to the export participation of the industrial sector of GMS countries. Policies are warranted to help support the industrial sector of GMS countries to achieve SDGs. These policy measures are easier access to financial services, access to skilled workforce, training of entrepreneurs, applying research and development, encouraging foreign investment for operational synergies and export incentives for penetration in the global market.

Technical Barriers to Trade and Firms' Export Decisions

This paper investigates the impact of restrictive TBTs on firms’ extensive margins (export participation and exit probability), intensive margins (export value) and pricing strategy (export price). To this end, product-level restrictive TBTs and firm-level export are combined and an instrumental-variable approach is utilized. The results show that the imposition of restrictive TBTs adversely affect firms’ intensive and extensive margins, but not significantly affect firms’ price on average. More importantly, firms of different types, in the sense of firm sizes, number of destination markets and ownership types, are affected differently. Given the same restrictive TBTs, firms with higher productivity suffer less, while firms with lower productivity are more vulnerable to the trade barriers.

АНАЛИЗ ИМПОРТА И ЭКСПОРТА АЛЖИРА

The article analyzes the dynamics and structure of the export-import relations of Algeria. The characteristics of the Algerian economy in the overwhelming majority of sources are consistently associated with the development of the country's energy sector, as well as the relatively low level of development of the socio-economic sphere. In the economy of Algeria, there are clearly marked trends of urbanization, an increase in the quality of life. An important role in this is played by the country's participation in the world export of hydrocarbons. At the turn of the 2000s, like a number of other North African countries, Algeria showed a clear readiness to integrate into the European economy, participate in large infrastructure projects (including the ambitious energy project DESERTEC, in which many EU companies were involved), there was an increase in business activity inside countries and the inflow of foreign investment, increased activity in the country of TNCs. All this taken together allowed researchers to predict in the 21st century. possible "African renaissance". However, the global crisis of 2008 and the subsequent crisis of world energy prices in 2014, the threat of the development in Algeria of a “color revolution” based on the model of neighboring countries of the region forced researchers to reconsider the forecasts for the development of the Algerian economy, revealed structural problems of the Algerian economy, offset by growth energy export revenues. In the context of a significant drop in world prices for energy resources and a slowdown in the growth rates of European economies, the influence of these factors on the state of export-import relations of Algeria, the state's trade balance, and the structure of foreign trade is of interest. The author comes to the conclusion that for Algeria the excessively high dependence of exports on hydrocarbon supplies was the reason for the formation in 2015 of a negative balance of the country's foreign trade for the first time since the early 2000s. The transition of the balance of foreign trade of Algeria to negative states is also influenced by the buildup of the negative balance of foreign trade with the PRC, which over the previous decade became the main trading partner of Algeria.

Глобальные цепочки создания стоимости в электронной промышленности: региональные изменения после кризиса 2008 г.

The objective of the research is to identify the specifics of the global value chains (GVCs) in the world electronics industry after the 2008 global financial crisis. The paper analyses key indicators of GVC participation of the largest electronics exporters in three regions (Europe, North America, and Asia). The analysis is based on TiVA 2018. Major GVC tendencies after the 2008 global financial crisis are revealed. The key tendencies are strengthening the regional character of the exports in overall as well as origins of foreign value added in exports. After 2008 a decrease in mean annual export growth rates is seen. The countries increased the share of domestic value added content of gross exports before the crisis, while after the crisis they increased the domestic value added becoming accordingly less dependent on foreign exports. In most states the upward export participation index declined after the crisis. This trend indicates a post-crisis GVC reduction and the increased orientation of states to value added exports that are consumed by the target markets or higher added value components used by foreign states in their respective domestic finished products. The general tendencies for states in GVC electronics does not exclude customized approaches and specifics of their incorporation in value chains but the analysis leads to the conclusion that countries in the same region show similar patterns of GVC participation. The Asian region plays a key role in the post-crisis transformation of the value chains

Does firm size affect learning-by-exporting? Empirical evidence from Sub-Saharan Africa

This study examines whether the relationship between exports and productivity growth differs across firm size. Using panel data from three Sub-Saharan African countries, I use propensity score matching procedure to examine this relationship. This study finds evidence of productivity differences between new exporters and non-exporters confirming the empirical regularity that new exporters are more productive than never exporters. The findings indicate that export participation effects vary across firm size, with both small and large firms experiencing immediate and significant productivity gains upon entry. However, the productivity gain for large firms is highly significant and more pronounced in the first two years after entry but declines drastically from the third year and tends towards negative in subsequent years. Learning effects might be important for large firms during the initial years of exporting, but these effects dissipate once learning avenues have been exhausted. Small firms display sustained learning effects that expand beyond the fourth year. Relative to the large firms, small new exporters display sustained and significant productivity growth for five year. This study finds no evidence of cumulative productivity growth beyond the third year for large firms. These results are robust to alternative measure of productivity. Any export-led growth should be directed at helping small new exporters access the export markets.

The Long and Short (Run) of Trade Elasticities

We propose a novel approach to estimate the trade elasticity at various horizons. When countries change Most Favored Nation (MFN) tariffs, partners that trade on MFN terms experience plausibly exogenous tariff changes. The differential effects on imports from these countries relative to a control group â?? countries not subject to the MFN tariff scheme â?? can be used to identify the trade elasticity. We build a panel dataset combining information on product-level tariffs and trade flows covering 1995-2018, and estimate the trade elasticity at short and long horizons using local projections (JordA , 2005). Our main findings are that the elasticity of tariff-exclusive trade flows in the year following the exogenous tariff change is about â??0.76, and the long-run elasticity ranges from â??1.75 to â??2.25. Our long-run estimates are smaller than typical in the literature, and it takes 7-10 years to converge to the long run, implying that (i) the welfare gains from trade are high and (ii) there are substantial convexities in the costs of adjusting export participation.

An Empirical Study of the Link between R&D and Exports in the Korean Electronics Industry: SMEs Versus Mid-sized Firms

Purpose - The purpose of this study is to investigates mainly the relationship between R&D investment decision and export participation decision in the Korean electronics industry. Design/methodology/approach - This study uses panel data of companies in the Korean electronics industry during the period from 2012 to 2017, which are listed on the KOSPI and KOSDAQ. The regression techniques used in this paper is the probit model and bivariate probit model. Findings - Empirical results show that the impact of past R&D investment decisions on both future R&D investment and export decisions is larger in SMEs than in mid-sized firms. By contrast, regarding the firm’s productivity, its impact on R&D investment and export decisions turns out to be stronger in mid-sized firms than in SMEs. Research implications or Originality - In korea, most existing empirical studies investigating the relationship between R&D and Exports have focused on firms in the manufacturing sector. Moreover, in doing so, those papers divide firms into two groups: SMEs(small and medium-sized enterprises) and large firms. This criteria for dividing firms into two groups by size depends on whether firm’s number of employees is larger or less than 300. Therefore, mid-sized firms of which the number of employees is between 100 and 300 are naturally included in the large-firm-category in previous studies. Unlike existing studies, this study divides firms into SMEs and mid-sized firms.

A study of factors affecting the export participation and performance of agricultural commodities exporters of Tamil Nadu in India

Exporters choose to export, for the foreign market through exporters participating in the foreign markets directly and also positively react to price signals in the domestic markets explicitly. When there is an increasing demand for commodities in the world market, exporter would receive higher prices. The specific objective of the study is; to identify factors affecting the export participation and performance of agricultural commodities exporters of Tamil Nadu. The results clearly indicated that among the independent variables, foreign market price and distribution of commodities by the ith firm have significantly and positively influenced the State level of export participation of the exporters. On the contrary, domestic market price, the quantity produced for the domestic market, quantity produced for the foreign market and the cost of export commodities have influenced the export participation negatively. The firms would produce positive quantities for the domestic market, but, in practice, some firms would produce for zero exports. Significant and negative nonlinear results were also found for Domestic market price, Quantity produced for the domestic market, Quantity produced for the foreign market and the cost of export commodities in this study.