Does Investing in Technology Affect Exports? Evidence from Indian Firms

The authors use firm-level data from Indian manufacturing industries to explore the determinants of exports, focusing on the role played by technology. The empirical analysis, which distinguishes between a firm's decision to export and the volume of its exports conditional on its having decided to export, reveals that investments in technology via R&D and technology transfer agreements can facilitate the entry of Indian firms into export markets. However, their influence on the volume of exports is fairly limited. Factors with a more broad-based influence on both export participation and volumes include labor intensity and, especially, firm size.     

Heterogeneous firms,corporate taxes and export behavior: A firm-level investigation for Italy

This paper analyses the effect of home corporate taxes on a firm’s decision to expand the scale of its activity through exports using a rich dataset on Italian firms. Starting out from the observation that firms’ export activity vary greatly among them and tend to be systematically related to firm’s characteristics, we relate differences in firms’ export choices to firm level incidence of corporate taxes. Our results suggest that (i) corporate taxes matter at both the extensive and the intensive margin and (ii) higher corporate taxes may increase the probability of new firms’ entry in the foreign market while they decrease the export intensity of incumbent exporters.     

Overseas business costs and firm export performance

Abstract.  The recent microeconomic literature on international trade has highlighted the importance of firm characteristics and trade costs for exports. This study provides evidence on one type of those costs, the costs of doing business overseas, from a theoretical and empirical perspective. Controlling for firm- and industry-level covariates, we find that improvements in the business environment of foreign countries lead to an increase in the export intensity of exporters in the UK manufacturing sector and additional export market entry. Further investigation suggests that important determinants of foreign business costs include factors relating to legal structure, property rights, and business regulation.     

Interrelationship among foreign presence,domestic sales and export intensity in Chinese manufacturing industries

Using panel data on six Chinese manufacturing industries over the period 2005–2007, this article explores the interrelationship among foreign presence, domestic sales and export intensity of local firms. We find that the domestic sales and exports are complementary for local firms in China’s pharmaceutical industry, whereas in the case of the textile, transportation equipment, beverage, communication equipment and general equipment manufacturing industries, domestic sales and exports are substitutes. An increase in the average domestic sales increases foreign presence in all industries. The same applies to an increase in the average export intensity. An increase in the level of competition in China’s textile industry increases the export intensity as well as domestic sales of local textile firms. However, an increase in the level of competition in the pharmaceutical industry leads to a very large decrease in export intensity of local pharmaceutical firms. In the case of China’s transportation equipment manufacturing industry, an increase in the level of competition decreases domestic sales of local firms. Furthermore, an increase in the firm size increases domestic sales of Chinese firms in all six manufacturing industries.     

Export surges

How can developing countries stimulate and sustain strong export growth? To answer this question, we examine 92 episodes of export surges, defined as significant increases in manufacturing export growth that are sustained for at least 7 years. We find that export surges in developing countries tend to be preceded by a large real depreciation, which leaves the exchange rate significantly undervalued. In contrast, in developed countries, the role of the exchange rate is less pronounced. We examine why the exchange rate is important in developing countries and find that the depreciation is associated with a significant reallocation of resources in the export sector. In particular, depreciation stimulates entry into new export products and new markets. These new exports are important, accounting for over 40% of export growth on average during the surge in developing countries. We argue that a large real depreciation induces firms to expand the product and market space for exports.     

Foreign direct investment,industrial restructuring and the upgrading of Polish exports

This paper poses a central question in relation to the economic-structural effect of Foreign Direct Investment (FDI) with Polish manufacturing as an empirical case: how FDI coincides with the technology intensity of Polish exports. A short review of the available literature discusses critically the possibility of establishing one-sided cause-effect relationships between trade and FDI. Subsequently the empirical analysis investigates what role incoming FDI appears to have played in relation to Polish export specialization over the period 1989–1996. Results indicate that FDI has affected positively the technology intensity of the Polish export base.     

扩大内需、工资上涨与对外出口 ——来自中国228个城市的面板数据

本文利用2000—2011年我国228个城市的面板数据，考察扩大内需、工资上涨对我国出口贸易产生的影响。研究表明：内需的提高和工资的上涨不仅不会抑制出口，还能促进出口贸易的扩张，数据显示：内需提高1%会促进出口量扩张约0263%，这意味着在目前阶段，我国对外贸易中国内消费需求因素发挥了核心作用；同时工资上涨1%，促进出口增加0174%,这说明工资上涨有助于提高劳动生产率，进而促进出口贸易。在分区域的研究中发现，扩大内需以及工资上涨对东、中、西部地区的出口贸易均能产生正向的促进作用，但是这一作用存在明显的地区差异性,对中部地区的作用最强。同时吸收外商直接投资以及减少政府干预对出口有正向激励作用。     

FINANCIAL FRICTIONS AND NEW EXPORTER DYNAMICS

This article studies the role of financial frictions as a barrier to international trade. We study new exporter dynamics to identify how these frictions affect export decisions. We introduce a borrowing constraint and working capital requirements into a standard model of international trade, with exports more working capital intensive than domestic sales. Our model can quantitatively account for new exporter dynamics in contrast to a model with sunk export entry costs. We provide additional evidence in support of our mechanism. We find that financial frictions reduce the impact of trade liberalization, suggesting that they constitute an important trade barrier.     

ENDOGENOUS MARKET STRUCTURES AND STRATEGIC TRADE POLICY*

I characterize the optimal export promoting policy for international markets whose structure is endogenous. Contrary to the ambiguous results of strategic trade policy for duopolies, it is always optimal to subsidize exports when entry is endogenous, under both quantity and price competition. With homogenous goods the optimal export subsidy is a fraction 1/ε of the price, where ε is the elasticity of demand (the exact opposite of the optimal export tax in the neoclassical trade theory). Analogously, I show the general optimality of R&D subsidies and of competitive devaluations to promote exports in foreign markets where entry is endogenous.     

Learning‐by‐Exporting Revisited: The Role of Intensity and Persistence*

Two non‐mutually exclusive hypotheses can explain the empirically established export premium: self‐selection of more productive firms into export markets and learning‐by‐exporting. This paper focuses on how the temporal dimension of firms' exporting activities and the intensity of exports influence the scope of learning effects. Using a panel of Swedish firms and dynamic generalized method of moments estimation, we find a learning effect among persistent exporters with high export intensity, but not among temporary exporters or persistent exporters with low export intensity. For small firms, exports boost productivity among persistent exporters with both high and low export intensity, but the effect is stronger for persistent export‐intensive small firms.     

Financial factors and the margins of trade: Evidence from cross-country firm-level data

Using a large cross-country, firm-level database containing 5000 firms in 9 developing and emerging economies, we study how financial factors affect both firms' export decisions and the amount exported by firms. First, our results highlight the importance of the impact of firms' access to finance on their entry decision into the export market. However, better financial health neither increases the probability of remaining an exporter once the firm has entered, nor the size of exports. Second, we find that financial constraints create a disconnection between firms' productivity and their export status: productivity is only a significant determinant of the export decision if the firm has a sufficient access to external finance. Finally, an increase in a country's financial development dampens this disconnection, thus acting both on the number of exporters and on the exporters' selection process. These results contribute to the literature documenting the role of fixed costs and of the extensive margin of trade in total trade adjustment, and provide micro-level evidence of the positive impact of financial development on trade found by previous literature.     

IMF conditionality,export structure and economic complexity:The ineffectiveness of structural adjustment programs

The conditionality requirements of the International Monetary Fund (IMF) have been a source of intense debate since the early 1980s. These conditions, which are attached to IMF lending programs, cover a variety of issues from fiscal and monetary reform to economic liberalization and institutional change. In this paper we empirically examined the effects of IMF programs and conditionality requirements on structural transformation through changes in the technology-and-skill intensity and overall economic complexity of exports. Our empirical methodology accounted for policy and conditionality heterogeneity across country and time and accounts for the endogeneity of IMF programs and conditions. The empirical results suggest that IMF programs and conditionality requirements along a spectrum of policy areas had no robust or significant effect on export structure, economic complexity or export diversification. Overall, we found no evidence of any positive effects of IMF programs or IMF conditionality requirements on the technology-and-skill intensity of exports.     

A Simple Theory of Trade,Finance and Firm Dynamics

A stylized monopolistic competition model of international trade is proposed where firms differ with respect to the expected economic lifetime of their innovations. Upon entry, they receive a commonly observed signal which is updated over time. Jointly with partial irreversibility of investment, this generates heterogeneity in effective discount rates and, thus, in the cost of finance. In line with evidence, the model predicts a negative correlation between firms' financing costs and their age. Over a firm's life cycle, per period net profits and the export participation probability grow. Exporters are less likely to exit than purely domestic firms. Belief updating entails excessive financing of incumbents relative to entrants and too much exporting. Asymptotically, trade liberalization reduces overall general equilibrium exit rates, but it does not necessarily increase welfare. With multiple asymmetric export markets, firms gradually expand their market coverage and total sales. A confidence crisis modeled by belief reversion causes an over‐proportional decrease in exports, thereby offering a novel interpretation of the trade slump in 2008/09.     

The quality and variety of exports from the new EU member states

The goal of this article is to evaluate the variety and quality of exports from the new EU member states (NMSs) in the period 1999–2009. The practical relevance of such an analysis is threefold: recent studies underline the importance of export variety for economic growth; empirical results show that export variety was influenced by the EU membership; and looking separately at export quality permits a better understanding of price competitiveness. Our results show that all NMSs significantly increased the average number of brands exported to the EU market, the largest increases being observed in 2004 and after. This indicates that integration into the EU market occurs in the extensive as well as the intensive dimension. We also find that all NMSs increased the average quality of their exports during the decade studied although there are differences between countries. Thus, a large part of the increase in the prices of exports from NMSs resulted from improving quality and did not result in a loss of competitiveness. Finally, estimates of relative quality are much more stable than relative prices, suggesting that our measure of relative quality is better than the traditional proxy.     

Small,young, and exporters: New evidence on the determinants of firm growth

This work investigates how the export status of the firm influences the patterns of employment growth at different age classes. We address this research question resorting to a novel set of data that links together the universe of Italian firms and detailed data on export transactions. We find that the positive relationship between export status and growth declines with firm age. Further, we also find that, even when accounting for the role of age, the negative size-growth relationship does not disappear, contrary to some recent evidence. These results suggest a positive signaling role of the export status that is stronger for young exporters or born globals. Exploiting the product-country level dimension of the customs data, we also provide, for the first time, evidence on differences in exchange rates pass-through between young and experienced exporters. In particular, we find that early exporters appear to be better equipped than established firms to face exchange rates variations as their exports decrease less following a currency appreciation.     

OVERSEAS NETWORK OF EXPORT PROMOTION AGENCY AND EXPORT PERFORMANCE: THE KOREAN CASE

Governments have established export promotion agencies (EPAs) in an effort to boost exports. Despite criticism regarding the effectiveness of EPAs, the policy has not been abandoned and there has been an increasing recognition of the benefits on the basis of economic justification, including market failures. Such policies must be based strictly on evidence. Are EPAs truly crucial for export success? Some have argued that export success in Korea has been due largely to government policies targeted at the promotion of exports. This paper demonstrates that the network of EPA offices abroad has been a critical factor in the success of Korea's exports. An increase of 10% in the budget of EPA's overseas offices has been shown to increase exports by 2.45%–6.34%. The findings of this paper present a clear rationale for government intervention. (JEL F10, F14)     

Trade Strategy, Investment and Exports: Another Look at East Asia

The export booms in South Korea and Taiwan starting in the early 1960s are anomalous when compared with later export booms in non-East Asian countries such as Chile and Turkey. First, these booms have taken place in the context of comparatively small changes in relative prices in favor of exportables. Second, they have been associated from the start with booms in investment. This paper offers evidence and a formal model to suggest that exports in East Asia may have been driven by an increase in the profitability of investment, with outward orientation a consequence of the investment boom rather than its instigator.     

Foreign Capital,Spillovers and Export Performance in Emerging Economies: Evidence from Indian IT Firms

The role of foreign capital inflow, foreign direct investment (FDI) and foreign portfolio investment (FPI), on export behavior of both recipients and non‐recipient competing firms in the same sector often guides economic development policy. By using panel data of Indian IT firms over 2000–2006, we show that FDI reduces the sunk costs of entering foreign markets and therefore positively effects both the decision to export and the export propensity of recipient firms. Foreign portfolio investment has no effect on the decision to export, but it does marginally increase the volume of exports. Further, these positive FDI and FPI recipient effects do not spill‐over to non‐recipients.     

Export tax refund and the misreporting by Chinese exporters

We document how Chinese exporters misreport their exports to China's customs in order to benefit from export tax refunds. We estimate the response of the logarithmic difference between the exports reported in China's customs data and the imports reported in destination countries' customs data to export tax refund rates. We find that with an increase of 1 percentage point in export tax refund rates, the logarithmic difference increases by 0.051. Additionally, with an increase of 1 percentage point in the export tax refund rates of similar products, this gap decreases by 0.024. Further study reveals that quantity manipulation accounts for the majority of the export reporting distortion.     

New trade theory,non-price competitiveness and export performance

This paper develops a demand function for Greece's exports of manufactures according to New Trade Theory. Non-price competitiveness plays a vital role in explaining export performance and failure to include it in the export equation may lead to mis-specification error. Foreign income has a moderately high effect on exports in the long run and no effect in the short run. Exports are also sensitive to domestic and competitors' prices in the long run, but cost and price competitiveness elasticities are close to one, indicating that Greek exporters have some ability to compete on the basis of prices.