Entrepreneurship and the Extensive Margin in Export Growth: A Microeconomic Accounting of Costa Rica's Export Growth During 1997-2007

31 Pages Posted: 20 Apr 2016

See all articles by Daniel Lederman

Daniel Lederman

World Bank - Latin America and Caribbean Region

Andres Rodriguez-Clare

Inter-American Development Bank (IDB)

Daniel Yi Xu

affiliation not provided to SSRN

Date Written: July 1, 2010

Abstract

The literature on the correlation between exports and economic development runs deep into the history of economic thought and permeates policy debates. This paper studies the microeconomic structure of export growth in Costa Rica, with special emphasis on the extensive margin of trade, encompassing new exporting firms, new products, and new export markets, as well as the unit values of new versus incumbent products. The data suggest that few new firms survive the test of exporting -- more than 40 percent of firms exit export activities after one year -- and this firm turnover is associated with a steady deterioration of export unit values (prices). Furthermore, most new export products are associated with product switching by incumbent exporting firms. The typical new product introduced by incumbent firms tended to be priced at about 90 percent of the unit values of incumbent products. In contrast, the usual suspected obstacles to export growth, such as the inability of small firms to enter exporting activities or to grow their exports, appear to be important sources of export growth. In fact, the smallest exporting firms experienced the fastest growth in their export values. Some of these results are compared with those from other countries that have been examined in related literature.

Keywords: Economic Theory & Research, Markets and Market Access, Airports and Air Services, Microfinance, Tax Law

Suggested Citation

Lederman, Daniel and Rodriguez-Clare, Andres and Yi Xu, Daniel, Entrepreneurship and the Extensive Margin in Export Growth: A Microeconomic Accounting of Costa Rica's Export Growth During 1997-2007 (July 1, 2010). World Bank Policy Research Working Paper No. 5376. Available at SSRN: https://ssrn.com/abstract=1647520

Daniel Lederman (Contact Author)

World Bank - Latin America and Caribbean Region ( email )

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Andres Rodriguez-Clare

Inter-American Development Bank (IDB)

1300 New York Avenue NW
Washington, DC 20577
United States

Daniel Yi Xu

affiliation not provided to SSRN

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