"Learning to Export: Export Growth and the Destination Decision of Firms"
Journal of International Economics Volume 87, Issue 1, May 2012, Pages 89-97 (abstract) (paper)
I find evidence that the geographic expansion of firm exports occurs slowly over time and that a large share of export growth is due to incumbent exporters entering new destinations. New exporters enter large countries and destinations with characteristics similar to their domestic market. Less similar, distant or less developed countries are entered by firms already exporting to other destinations. I formulate a dynamic general equilibrium model to test if these patterns are due to firms learning how to export (as other recent empirical findings have suggested) or other factors considered in the literature. In this model, heterogeneous firms experience learning in the form of market entry costs that depend on export history. Using Russian firm level data, I find that learning plays a significant role in explaining the observed entry patterns, which standard trade models cannot account for.
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"Tradability and market penetration costs: explaining foreign market servicing intensities"
with Miguel Ricaurte (Central Bank of Chile)
International Review of Economics & Finance
Volume 22, Issue 1, April 2012, Pages 190-200 (abstract) (paper)
Industry level data shows striking differences among sectors in ratios of exports to FDI sales. We identify the elements behind the sectoral differences in the mode of foreign market servicing in the context of a general equilibrium model of monopolistic competition. Our calibration exercise shows that traditional margins such as transportation, fixed entry costs, utility weights, and dispersion of firm productivity are not enough to capture the observed sectoral differences, as is commonly assumed. We propose augmenting the model to allow for sectoral differences in intangible costs of operating in a foreign market in order to explain these observations.
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"Six Comparisons of Firm-Level and Product-Level Data"
with Andrew Cassey (Washington State University)
Forthcoming, Applied Economics Letters Volume 20, Issue 4, 2013, Pages 382-385
(abstract) (paper)
We compare readily available product-level export data with hard-to-obtain firm-level export data along six dimensions such as value and the number of destination countries. We find the product data qualitatively matches the firm-level data, but not quantitively, particularly on dynamics. This is due to the categorization of products. However, product data can be used to establish a lower estimate on statistics compared to firm-level data that may be useful in monopolistic competition model of international trade.
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"The Agglomeration of Exporters by Destination"
with Andrew Cassey (Washington State University)
Forthcoming, The Annals of Regional Science
(abstract) (paper) (online appendix)
Precise characterization of informational trade barriers is neither well documented nor understood. Using Russian customs data, we document that regional destination-specific export spillovers exist for developing countries, extending a result that was only known for developed countries. This result suggests behavior responding to a destination barrier. To account for this fact, we build on a monopolistic competition model of trade by postulating an externality in the international transaction of goods. We test the model's prediction on region-level exports using Russian data and find improvement over gravity-type models without agglomeration. This finding has important development implications in that export policy that considers current trade partners may be more effective than policy that focuses only on the exporting country's industries. Furthermore, our findings can be considered in the burgeoning literature refining transaction costs beyond the traditional iceberg cost.
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"Multilateral Export Decompositions"
with Andrew Cassey (Washington State University)
Forthcoming, Open Economies Review
(abstract) (paper)
We analyze exports along five margins to observe the changes of newly exported products, products removed from the export market, and continuously traded products to new, old, and exited destinations on export growth. We find export shares differ between developing and developed countries: 1) entering and exiting products are an important source of export value, but more so for developing than developed countries, 2) that continuously exported products to new destinations are a more important source of export value for developing than developed countries, 3) that though the removal of exiting products has a large impact on export value, the removal of products from one destination that continue to be exported elsewhere results in little loss to total export value, and 4) that larger and richer exporting countries have less opportunity to increase exports from new destinations than smaller and poorer exporting countries. Understanding the change in these margins across different types of countries may be important for formulating trade agreements and targeting of new trade partners.
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"The Firm Export and FDI Choice in the Context of Gravity"
Forthcoming, International Review of Economics & Finance
(abstract) (paper)
In this paper, I show that in a theoretical environment where monopolistic competitive firms choose between exporting and servicing through a multinational with foreign direct investment (FDI), a gravity representation of exports and FDI can be derived. I then discuss the extent to which the resulting gravity equations are comparable and suggest a gravity- type regression that allows for direct interpretation of the differential effects of variables on exports and FDI.
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