The Micro Dynamics of Exporting: Evidence from French Firms

Buono, Ines and Fadinger, Harald and Berger, Stefan (2008): The Micro Dynamics of Exporting: Evidence from French Firms.

Abstract

This paper describes the dynamics of firms' exports to different countries. Using a panel of almost 19,000 French exporters, we define an export-relation as an observed positive export flow from a French firm to a destination. We establish the following facts: 1. There is a great deal of dynamics in firms' export relations that washes out at a more aggregate level; 2. Export values shipped by individual firms to specific destinations are very volatile: most of the changes occur within established export relations (intensive margin), with new relations or relations that are terminated (extensive margin)contributing little to adjustments in export value at firm level ; 3. Export flows within a newly-created relation involve very small values, often inferior to 1000 euros; 4. Export-relations are also very volatile. Moreover, from year to year single firms create and destroy relations simultaneously, and countries are simultaneously involved in the formation and termination of relations; 5. Formation or termination of export relations and changes in export values are explained mostly by firm-country specific shocks; 6. The share of relations continued from one year to the next is correlated with country characteristics: it is higher in bigger and closer markets. We discuss how those findings could be related to different kind of heterogeneous firm models and to a relation-specific trade model, arguing that the second one seems to fit more naturally all the documented facts.

• Item Type: MPRA Paper
• Language: English
• Keywords: firm level trade, trade dynamics, state dependence, extensive/intensive margin
• Subjects: F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; F - International Economics > F1 - Trade; F - International Economics > F1 - Trade > F19 - Other

References

Araujo, Luis and Emanuel Ornelas, "Trust Based Trade," CEP Discussion Paper, 2007, 820.

Baldwin, Richard and Paul Krugman, "Persistent Trade Effects of Large Exchange Rate Shocks," Quarterly Journal of Economics, 1989, (419), 635-654.

Bernard, Andrew and Bradford Jensen, "Why Some Firms Export," Review of Economics and Statistics, 2004, 86, 561-569.

Jonathan Eaton, Bradford Jensen, and Samuel Kortum, "Plants and Productivity in International Trade," American Economic Review, 2003, 93, 1268-1290.

Chaney, Thomas, "Distorted Gravity: The Intensive and the Extensive Margin of International Trade," American Economic Review, 2008, 98 (4).

Das, Sanghamitra, Mark Roberts, and James Tybout, "Market Entry Cost, Producer Heterogeneity and Export Dynamics," Econometrica, 2007, 75 (3), 837-873.

Dixit, Avinash, "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, 1989, 97 (3).

Eaton, Jonathan, Marcela Eslava, Maurice Kugler, and James Tybout, "The Margins of Entry into Export Markets: Evidence from Colombia," NBER Working paper, 2007, (13531).

Eaton Jonathan, Samuel Kortum, and Francis Kramarz, "Dissecting Trade: Firms, Industries and Export Destinations," American Economic Review, Papers and Proceedings, 2004.

Eaton Jonathan, Samuel Kortum, and Francis Kramarz, "An Anatomy of International Trade: Evidence from French Firms," mimeo, 2008.

Lawless, Martina, "Firm Export Dynamics and the Geography of Trade," Central Bank and Financial Services Authority of Ireland, Research Technical Paper, 2007.

Melitz, Marc, "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Pro- ductivity," Econometrica, 2003, 71, 1695-1725.

Melitz, Marc and Gianmarco Ottaviano, "Market Size, Trade, and Productivity," Review of Economic Studies, 2008, 75.

Rauch, James E. and Joel Watson, "Starting Small in an Unfamiliar Environment," International Journal of Industrial Organization, 2003, 87, 545-564.

Roberts, Mark and James Tybout, "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, 1997, 87, 545-564.

Segura-Cayuela, Ruben and Josep Vilarrubia, "Uncertainty and Entry into Export Markets," Banco de Espana working paper, 2008, 0811.