Learning from Neighbors’ Export Activities: Evidence from Exporters’ Survival

54 Pages Posted: 19 Sep 2012

See all articles by Ana Fernandes

Ana Fernandes

affiliation not provided to SSRN

Heiwai Tang

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS); The University of Hong Kong - Faculty of Business and Economics; CESIfo; Kiel Institute for the World Economy

Date Written: July 1, 2012

Abstract

Recent studies in international trade report that new exporters often start selling small amounts and cease exporting in the first year. These findings reflect a substantial amount of uncertainty facing new exporters. In this paper we study whether export activities in the neighborhood reveal information about export profitability and thus enhance new exporters’ performance. Using transaction-level data for the universe of exporters in China over the period of 2001-2005, we find that new exporters’ first-year sales and probability of survival are both higher in cities where there are more existing export activities in the same market (industry or destination country). Export activities in other markets do not generate any positive spillovers, and in some cases we find negative spillovers. Spillovers from processing exporters are weaker. Foreign exporters benefit less from neighboring export activities. The relation between the magnitude of spillovers and the proxies for demand uncertainty is non-monotonic. We empirically verify that our findings are unlikely to be spurious or resulted from spillovers through the credit-constraint or the imported-material channels.

Keywords: knowledge spillovers, uncertainty, export dynamics, multi-product

JEL Classification: F1, F2

Suggested Citation

Fernandes, Ana and Tang, Heiwai, Learning from Neighbors’ Export Activities: Evidence from Exporters’ Survival (July 1, 2012). Centro Studi Luca d'Agliano Development Studies Working Paper No. 337, Available at SSRN: https://ssrn.com/abstract=2147788 or http://dx.doi.org/10.2139/ssrn.2147788

Ana Fernandes

affiliation not provided to SSRN ( email )

Heiwai Tang (Contact Author)

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036-1984
United States

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

CESIfo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

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