Identifying Supply-Side Constraints to Export Performance in Ecuador: An Exercise With Investment Climate Survey Data

34 Pages Posted: 20 Apr 2016

See all articles by Paulo Guilherme Correa

Paulo Guilherme Correa

World Bank

Mariam Dayoub

World Bank

Manuela Francisco

University of Nottingham - School of Economics

Date Written: March 1, 2007

Abstract

The authors apply a Heckman selection model to the 2003 Investment Climate Survey (ICS) to investigate supply-side constraints to export performance at the firm level in Ecuador. To correct for the non-random truncation problems, they use the Heckman selection model to estimate the probability of exporting (export propensity) and the share of total sales that are exported (export intensity) by Ecuadorian firms. They develop a baseline model with 12 independent variables divided into three categories-idiosyncratic characteristics, technology, and business environment. The authors develop three other models with the addition of variables related to trade integration, business environment, and infrastructure. Results corroborate with the hypothesis implicit in the Heckman model, which considers both decisions made by a firm - whether to export, and how much of its sales to export - to be interdependent. In the Ecuadorian case, they find three important results for the firm's export performance: technology matters; infrastructure does not; and trade orientation is significant, with specialized firms tending to have smaller export intensity when their main trade partners are countries of the Andean Community, and the opposite happeningif the United States is their main trade partner. The authors find a robust and stable relationship for export propensity and intensity with size, import of inputs, labor regulations, in-house research and development, quality certification, web-use, and foreign ownership. Also, capacity utilization and trade with the United States positively affect export intensity, while trade within the Andean Community has the opposite effect in the outcome variable. But they find no significant relationship for the infrastructure variables.

Keywords: Free Trade, Private Participation in Infrastructure, Microfinance, Small Scale Enterprise, Markets and Market Access

Suggested Citation

Correa, Paulo Guilherme and Dayoub, Mariam and Francisco, Manuela, Identifying Supply-Side Constraints to Export Performance in Ecuador: An Exercise With Investment Climate Survey Data (March 1, 2007). World Bank Policy Research Working Paper No. 4179, Available at SSRN: https://ssrn.com/abstract=976122

Paulo Guilherme Correa (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Mariam Dayoub

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Manuela Francisco

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
115 951 5870 (Phone)
115 951 4159 (Fax)

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