Firm export dynamics and the geography of trade

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jinteco.2009.01.006 Byline: Martina Lawless Keywords: Firm exports; Market coverage; Market entry and exit Abstract: Two recent trends in international economics have been an increased focus on the geography of trade (e.g. what factors determine where a country exports) and the emergence of new theoretical and empirical work examining exporting activity at the firm-level. However, data limitations have prevented much progress in combining these two areas, because very few countries provide firm-level data breaking down firm exports by their destination. This paper uses a unique survey of Irish exporting firms with information on over fifty destinations for a five-year period to fill some of the gaps in this empirical literature. In particular we investigate how well the predications of a model of exporting with firm heterogeneity fits with the patterns of this detailed data source. Amongst our findings are that firm productivity differences are a factor in explaining the number of export markets a firm has but the prediction of a hierarchy of markets could only be weakly upheld by the data. Firm involvement in individual export markets is found to be much more dynamic than export status. Entry and exit to markets is shown to be a quantifiably important component of overall export flows, with this factor becoming more important for less popular markets. The paper also shows how the patterns of entry and exit into export markets combine to determine the overall firm-level distribution of number of markets entered. Author Affiliation: Central Bank and Financial Services Authority of Ireland, PO Box 559, Dame Street, Dublin 2, Ireland Article History: Received 23 February 2007; Revised 9 January 2009; Accepted 14 January 2009