Export Participation Research Articles

The economic effects of trade policy uncertainty

This paper studies the effects of unexpected changes in trade policy uncertainty (TPU) on the U.S. economy. Three measures of TPU are constructed using newspaper coverage, firms’ earnings calls, and tariff rates. Firm-level and aggregate macroeconomic data reveal that increases in TPU reduce business investment. The empirical results are interpreted through the lens of a two-country general equilibrium model with nominal rigidities and firms’ export participation decisions. News and increased uncertainty about higher future tariffs reduce investment and activity.

The Economic Effects of Trade Policy Uncertainty

We study the effects of unexpected changes in trade policy uncertainty (TPU) on the U.S. economy. We construct three measures of TPU based on newspaper coverage, firms' earnings conference calls, and aggregate data on tari rates. We document that increases in TPU reduce investment and activity using both firm-level and aggregate macroeconomic data. We interpret the empirical results through the lens of a two-country general equilibrium model with nominal rigidities and firms' export participation decisions. In the model as in the data, news and increased uncertainty about higher future tariffs reduce investment and activity.

The impact of smallholder farmers’ participation in avocado export markets on the labor market, farm yields, sales prices, and incomes in Kenya

Smallholder producers in sub-Saharan Africa are often unable integrate into markets and access high-value opportunities by effectively participating in global chains for high-value fresh produce. Using data from a survey of large avocado farmers in Kenya, this study examines the determinants and impacts of smallholder-producer participation in avocado export markets on labor inputs, farm yields, sales prices, and incomes, using a switching regression framework to control for selection effects. We found that farmers who participate in export markets differ significantly from nonparticipating farmers: They are older, have somewhat larger farms, have received more training, and own more avocado trees of the Hass variety, the type favored in export markets. Living near a well-functioning avocado farmers’ group is also positively associated with participation in export markets. Participation in avocado export markets will have positive impacts on incomes, revenues, prices, and labor inputs. However, there is an offsetting effect in terms of higher prices and lower volumes, reflecting the stricter quality requirements of export markets. Applying a decomposition analysis, we found that not only differences in endowment sizes, but also differences in returns from endowments in export versus domestic markets, are key to understanding differences in yields, revenues, sales prices, and labor inputs. This suggests that policymakers should not only focus on resource accumulation for farmers, but also pay attention to the inclusiveness of export market participation for smallholder farmers.

Financial Constraints and Export Participation of SMEs in Post-Communist Countries*

This paper examines the impact of medium- and short-term financial constraints on the probability of export participation of SMEs in 28 post-communist countries. The regression analysis conducted over the cross-sectional sample of SMEs taken from the BEEPS III-IV-V shows that the medium- and short-term financial constraints produce a significantly negative effect on the probability of exporting. Although there exist arguments for why the effects of medium- and short-term financial constraints can differ from each other, both the medium- and short-term financial constraints appear to reduce the probability of exporting equally by 25%. The regression results also suggest that more productive, innovative, and larger SMEs, and also SMEs with international quality certificates are more likely to export. When the regressions are separately estimated for the first-time and continuous exporters, it appears that only the probability of exporting of continuous exporters is significantly sensitive to the financial constraints. Furthermore, the regressions separately run for the direct and indirect exporters show that the financial constraints have a larger effect on the probability of exporting of indirect exporters. The heterogeneity analysis shows that there is a significant heterogeneity in the effects of medium- and short-term financial constraints on the likelihood of exporting across regions, industries, periods, and firm types.

Enabling Environment for Participation in Information Storage Media Export and Digital Evidence Search Process using IPA

Recently, the use of digital media such as computers and smart devices has been rapidly increasing, The vast and diverse information contained in the warrant of the investigating agency also includes the one irrelevant to the crime. Therefore, when confiscating the information, the basic rights, defense rights and privacy invasion of the person to be seized have been the center of criticism. Although the investigation agency guarantees the right to participate, it does not have specific guidelines, so they are various by the contexts and environments. In this process, the abuse of the participation right is detrimental to the speed and integrity of the investigation, and there is a side effect that the digital evidence might be destroyed by remote initialization. In this study, we conducted surveys of digital evidence analysts across the country based on four domains and thirty measurement items for enabling environment for participation in information storage media export and digital evidence search process. The difference between the level of importance and the performance was analyzed by the IPA matrix based on process, location, people, and technology dimensions. Seven items belonging to “concentrate here” area are one process-related, three location-related, and three people-related items. This study is meaningful to be a basis for establishing the proper policies and strategies for ensuring participation right, as well as for minimizing the side effects.

WHAT'S BEHIND THE FIGURES? QUANTIFYING THE CROSS‐COUNTRY EXPORTER PRODUCTIVITY GAP

We present a simple framework that allows us to examine the cross‐country exporter productivity gap without accessing confidential firm‐level data. This gap depends on the three readily available statistics: the productivity gap between two countries; the export participation rates; and export premia. This gap holds irrespective of the distribution underlying firm productivity and irrespective of the presence of fixed costs. Under specific conditions, allocative efficiency may affect the exporter productivity gap. The empirical analysis globally validates this exercise. (JEL F1, D24)

Brexit and the macroeconomic impact of trade policy uncertainty

On June 23, 2016, the United Kingdom voted to leave the European Union. The trade policies that will replace E.U. membership are uncertain, however, and speculation abounds that this uncertainty will cause immediate harm to the U.K. economy. In this paper, I use a dynamic general equilibrium model with heterogeneous firms, endogenous export participation, and stochastic trade costs to quantify the impact of uncertainty about post-Brexit trade policies. I find that the total consumption-equivalent welfare cost of Brexit for U.K. households is between 0.4 and 1.2%, but less than a quarter of a percent of this cost is due to uncertainty.

The extensive margin of trade and monetary policy

This paper studies the effects of monetary policy shocks on firms’ participation in exporting. The VAR analysis shows that the extensive margin of exports declines in response to domestic expansionary monetary shocks. We develop a two-country dynamic stochastic general equilibrium model in which heterogeneous firms make forward-looking decisions on whether to participate in the export market and prices are staggered across firms and time. We show that while lower interest rates and a currency depreciation associated with an expansionary monetary policy help to increase the value of exporting, the inflationary effects of the policy stimulus weaken the competitiveness of some firms, resulting in a contraction in firms’ export participation. In contrast, positive productivity shocks lead to a currency depreciation and an expansion in export participation at the same time. We show that, overall, the extensive margin is more sensitive to firms’ price competitiveness with other firms in the export market than to exchange rate movements or interest rates.

How Do Technical Barriers to Trade Affect Exports? <br/>Evidence from Egyptian Firm-Level Data

The paper examines the impact of Technical Barriers to Trade on firms’ exports in Egypt over the period 2005~2011. Firm-level data for Egypt are combined with the WTO’s TBT-specific trade concerns database. Employing a variant of a gravity model with highdimensional fixed effects, the impact of Technical Barriers to Trade on firms’ intensive and extensive margins, and exit and entry probabilities is estimated, as well as impacts on product and market diversification. Regressions examine the heterogeneous effect of Technical Barriers to Trade by firm size. Results indicate an insignificant effect of Technical Barriers to Trade on firms’ intensive margin. On the other hand, the extensive margin and entry probability are negatively affected by Technical Barriers to Trade, whereas exit probability is positively affected. Accordingly, Technical Barriers to Trade mainly induce an increase in the fixed costs of exporting. Importantly, smaller firms are more adversely affected by Technical Barriers to Trade in their export participation and entry and exit decisions. The effect of Technical Barriers to Trade on firms’ product diversification is found to be sector-dependent:positive for agricultural sectors and mixed for non-agricultural ones. Finally, firms generally tend to increase their market diversification in response to Technical Barriers to Trade. This is especially true for large firms within their set of African and Asian destination markets. By contrast, there are lower prospects of firm diversification into less stringent destinations within the European region.

Complementarity of R&D and productivity in SME export behavior

This study investigates the link between export behavior, labor productivity and R&D activities in 17,168 small and medium-sized firms (SMEs) in Austria, during the period 1995–2011. The analysis covers six subgroups of SMEs: young, old, micro, born global, manufacturing, and services. Using a two-part model controlling for firm effects, the results show that both the export participation and the export share of SMEs depend significantly and positively on the level of labor productivity (relative to that of large firms in the same industry) and the R&D-sales ratio. Another important finding is that labor productivity strengthens the relationship between R&D activities and exports. Marginal effects show a large degree of heterogeneity in the relationships across the six sub-groups of SMEs. The link between R&D and export behavior, for a given level of labor productivity, is relatively pronounced for manufacturing SMEs, larger and older SMEs, while the other sub-groups are less affected.

Does “Internet Plus” Promote New Export Space for Firms? Evidence from China

AbstractBased on data from the Chinese Industrial Enterprises Database, this paper investigates the effect of “Internet Plus” on the trade destination mix at the enterprise level. The analysis extends the classic dual margins to three dimensions: destination extensive, destination intensive and destination structural margins. The paper suggests that connecting to the internet not only raises Chinese firms' propensity to export, but also extends the destination extensive margin. In addition, Internet Plus could create a synergistic effect for internet‐enabled enterprises, that is, the development of the destination country's internet access benefits domestic firms' export participation. Finally, the paper finds that Internet Plus, rather than increasing the intensive or structural margins, leads to the transfer of exports to lower‐middle‐income countries and helps firms achieve competitiveness and thus increases their profit. The paper provides an explanatory mechanism and empirical evidence for firms' use of the internet to optimize export space.

Temporary exports and characteristics of destination countries: first evidence from German transaction data

Abstract This paper uses information on all export transactions of goods by German firms with countries outside the European Union from 2009 to 2014 to document for the first time the patterns of export participation at the firm-good-destination level over time and to investigate the link between the duration of export patterns and characteristics of destination countries. It turns out that only 6.5 percent of all combinations were recorded in each year, while more than half of all patterns are only observed once. In line with theoretical hypotheses, the likelihood of permanent trade patterns increases within a firm with proximity and market size of destination countries.

A structural model of productivity, uncertain demand, and export dynamics

This paper develops and estimates a dynamic model of exporting to quantify how productivity and uncertain foreign demand separately influence firms' export participation. In this model, firms face uncertainty about their own foreign demand, and they update their beliefs based on individual export transactions according to Bayes' rule. I estimate the model using data on firm-level production and transaction-level exports to Germany in the Chinese ceramics and glass industry. The empirical results show substantial heterogeneity in productivity and demand belief. For experienced firms, productivity is the major driving force of export participation. In contrast, for potential entrants, demand learning plays a more important role. A counterfactual exercise suggests that trade cost reduction has a significant impact on stimulating the export participation of potential entrants. Importantly, more than half of the participation increase is attributed to firms' endogenous reaction to demand learning in the foreign market.

EFISIENSI PABRIK KELAPA SAWIT DI INDONESIA

Crude palm oil (CPO) is one of Indonesian agricultural products that are widely developed. CPO is produced by palm oil mills. This research analyzes the efficiency of Indonesian palm oil mills uses 2010 manufacturing industry survey conducted by the Statistics Indonesia. The efficiency analysis is done by using Data Envelopment Analysis (DEA) with production value as the output, and production expenses, labor expenses, other expenses, and fixed capital as the inputs. It is found that 26 out 137 firms are efficient. Based on the capital ownership, foreign firms have the highest average efficiency score. Based on export participation, exporting firms have higher efficiency than non-exporting firms. Based on location, firms that located on other islands have higher efficiency than firms that located on Sumatra and Kalimantan.

Measuring Global Value Chains

Recent decades have seen the emergence of global value chains (GVCs), in which production stages for individual goods are broken apart and scattered across countries. Stimulated by these developments, there has been rapid progress in data and methods for measuring GVC linkages. The macro approach to measuring GVCs connects national input–output tables across borders by using bilateral trade data to construct global input–output tables. These tables have been applied to measure trade in value added, the length of and location of producers in GVCs, and price linkages across countries. The micro approach uses firm-level data to document firms’ input sourcing decisions, how import and export participation are linked, and how multinational firms organize their production networks. In this review, I evaluate progress in these two approaches, highlighting points of contact between them and areas that demand further work. I argue that further convergence between these approaches can strengthen both, yielding a more complete empirical portrait of GVCs.

Renegotiation of Trade Agreements and Firm Exporting Decisions: Evidence from the Impact of Brexit on UK Exports

The renegotiation of a trade agreement introduces uncertainty into the economic environment. In June 2016 the British electorate unexpectedly voted to leave the European Union, introducing a new era in which the UK and EU began to renegotiate the terms of the UK-EU trading relationship. We exploit this natural experiment to estimate the impact of uncertainty associated with trade agreement renegotiation on the export participation decision of firms in the UK. Starting from the Handley and Limao (2017) model of exporting under trade policy uncertainty, we derive testable predictions of firm entry into (exit from) a foreign market under an uncertain `renegotiation regime'. Empirically, we develop measures of the trade policy uncertainty facing firms exporting from the UK to the EU after June 2016. Using the universe of UK export transactions at the firm and product level, and cross-sectional variation in `threat point' tariffs, we estimate that in 2016 over 5300 exporters did not enter into exporting new products to the EU, whilst over 5400 exporters exited from exporting products to the EU. Entry (exit) in 2016 would have been 5.0% higher (6.1% lower) if firms exporting from the UK to the EU had not faced increased trade policy uncertainty after June 2016.

What do Exporters Know?*

Much of the variation in international trade volume is driven by firms’ extensive margin decisions of whether to participate in export markets. We evaluate how the information potential exporters possess influences their decisions. We estimate a model of export participation in which firms weigh the fixed costs of exporting against the forecasted profits from serving a foreign market. We adopt a moment inequality approach, placing weak assumptions on firms’ expectations. The framework allows us to test whether firms differ in the information they have about foreign markets. We find that larger firms possess better knowledge of market conditions in foreign countries, even when those firms have not exported in the past. Quantifying the value of information, we show that, in a typical destination, total exports rise while the number of exporters falls when firms have access to better information to forecast export revenues.

SOURCES OF FINANCE AND EXPORT PERFORMANCE: EVIDENCE FROM THAI MANUFACTURING SMEs

This study emphasizes the contribution of sources of finance to the export participation and export intensity of Thai manufacturing small and medium-sized enterprises (SMEs) and manufacturing firms in aggregate. It also elaborates on other key factors contributing to SME manufacturing firm export activity. The empirical results presented confirm that the Export–Import Bank of Thailand (EXIM Bank) and the Department of International Trade Promotion (DITP) both play a significant role in enhancing Thai SME and all manufacturing firm export participation and export intensity. Local and foreign commercial banks, however, are not found to have a significant correlation with their export participation and export intensity. In addition, SMEs and all manufacturing firms receiving funds from friends and family are found to participate less in foreign markets compared to those SMEs and all manufacturing firms in aggregate which do not receive any funds from their friends and family. With respect to the importance of type of ownership for export activity, foreign ownership can help promote the export participation and intensity of Thai manufacturing SMEs and all manufacturing enterprises. Technological innovation activity also helps them to participate in foreign markets. The empirical evidence also points out that financial institutions in Thailand remain reliant on collateral-based lending and financial transparency. A key finding from this paper is that manufacturing SMEs are likely to perform worse in terms of export participation, export intensity, and access to finance compared to large manufacturing enterprises.

Renegotiation of Trade Agreements and Firm Exporting Decisions: Evidence from the Impact of Brexit on UK Exports

The renegotiation of a trade agreement introduces uncertainty into the economic environment. In June 2016 the British electorate unexpectedly voted to leave the European Union, introducing a new era in which the UK and EU began to renegotiate the terms of the UK-EU trading relationship. We exploit this natural experiment to estimate the impact of uncertainty associated with trade agreement renegotiation on the export participation decision of firms in the UK. Starting from the Handley and Limao (2017) model of exporting under trade policy uncertainty, we derive testable predictions of firm entry into (exit from) a foreign market under an uncertain `renegotiation regime'. Empirically, we develop measures of the trade policy uncertainty facing firms exporting from the UK to the EU after June 2016. Using the universe of UK export transactions at the firm and product level, and cross-sectional variation in `threat point' tariffs, we estimate that in 2016 over 5300 exporters did not enter into exporting new products to the EU, whilst over 5400 exporters exited from exporting products to the EU. Entry (exit) in 2016 would have been 5.0% higher (6.1% lower) if firms exporting from the UK to the EU had not faced increased trade policy uncertainty after June 2016.

An economic model of search and matching in international trade

AbstractA framework is developed to explain export participation among firms that produce differentiated products and may choose to exert costly effort to find foreign buyers. Export participation is linked to firm search costs, importer search costs, tariffs, the rate of contract breakdown, the distribution of bargaining power, and the degree of product differentiation. Propositions are derived that shed light on historic changes in export participation among firms while also generating hypotheses for further study. The model is applied to small U.S. food manufacturers and is shown to be able to explain changes in export participation among such firms.