Working Paper: NBER ID: w13628
Authors: Tibor Besedes; Thomas J. Prusa
Abstract: We investigate and compare countries' export growth based on their performance at the extensive and intensive export margins. Our empirical approach is motivated by an extension to the Melitz (2003) model of heterogeneous firms in which exporters are subject to a one-time sunk cost and also a per-period fixed cost. With imperfect information a firm may enter export markets but shortly exit when it learns its per- period fixed costs. We apply this insight to disaggregated export data and confirm that indeed most export relationships are very short lived. We then show that the survival issue is a significant factor in explaining differences in long run export performance. We find that developing countries would experience significantly higher export growth if they were able to improve their performance with respect to the two key components of the intensive margin: survival and deepening.
Keywords: export growth; extensive margin; intensive margin; trade dynamics
JEL Codes: F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| survival of export relationships (F10) | long-run export performance (F14) |
| better survival rates (I14) | higher export growth (F10) |
| intensive margin (C24) | export growth (F43) |
| extensive margin (F12) | long-term growth (D25) |
| improved survival rates (I14) | increased export growth (F10) |