University of Nottingham - School of Economics; CEP at the LSE
Ifo Institute for Economic Research - International Trade; University of Bayreuth - Chair of Empirical Economics
University of Bayreuth; CESifo; Ifo Institute for Economic Research; GEP at the University of Nottingham
December 14, 2011
CESifo Working Paper Series No. 3672
In this paper, we provide evidence that expanding firms tend to serve new markets which are geographically close and culturally related to their prior export destinations. We quantify the impact of this spatial pattern using a Chinese firm-level data set. To ensure an exogenous set of potential new destinations (25 EU countries, US and Canada) and an exogenous timing of entry, we focus on firms that benefited from the abrupt end of the textile quota restrictions in 2005. Controlling for firm-product and destination specific effects and accounting for possible multiple new export destinations we show that the probability to export to a country increases by 15 to 38 percent for each prior export destination with a geographical or cultural link with this country.
Number of Pages in PDF File: 36
Keywords: export destination choice, spatial correlation, firm-level customs data, MFA/ATC quota removal
JEL Classification: F120, F130, C250working papers series
Date posted: December 14, 2011
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