Working Paper: NBER ID: w16597
Authors: William Easterly; Ariell Reshef
Abstract: We establish the following stylized facts: (1) Exports are characterized by Big Hits, (2) the Big Hits change from one period to the next, and (3) these changes are not explained by global factors like global commodity prices. These conclusions are robust to excluding extractable products (oil and minerals) and other commodities. Moreover, African Big Hits exhibit similar patterns as Big Hits in non-African countries. We also discuss some concerns about data quality. These stylized facts are inconsistent with the traditional view that sees African exports as a passive commodity endowment, where changes are driven mostly by global commodity prices. In order to better understand the determinants of export success in Africa we interviewed several exporting entrepreneurs, government officials and NGOs. Some of the determinants that we document are conventional: moving up the quality ladder, utilizing strong comparative advantage, trade liberalization, investment in technological upgrades, foreign ownership, ethnic networks, and personal foreign experience of the entrepreneur. Other successes are triggered by idiosyncratic factors like entrepreneurial persistence, luck, and cost shocks, and some of the successes occur in areas that usually fail.
Keywords: African exports; export success; big hits; global commodity prices; entrepreneurship
JEL Codes: D8; F1; O1; O3; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| entrepreneurial activity (L26) | export success (Y10) |
| market conditions (P42) | export success (Y10) |
| global commodity prices (Q02) | export success (Y10) |
| domestic factors (F55) | export success (Y10) |
| changes in export shares (F14) | quantity changes (C69) |
| export success follows a power law (C59) | big hits in exports (F10) |
| quality improvements (L15) | export outcomes (P47) |
| trade liberalization (F13) | export outcomes (P47) |
| personal foreign experience of entrepreneurs (F23) | export outcomes (P47) |