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Pierola Castro, Martha Denisse

Trade and Integration Team, Development Research Group, The World Bank

Fields of Specialization

International economics, Export development, Firm-level analysis of trade

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Trade and Integration Team, Development Research Group, The World Bank

Last updated January 31, 2023

Biography

Martha Denisse Pierola is an Economist in the Trade and International Integration Unit of the Development Research Group of the World Bank. She has published several papers on export growth and exporter dynamics and co-created the Exporter Dynamics Database –the first-ever global database on exporter growth and dynamics, based on firm-level export data. Her research studies the role of large exporters in driving trade patterns and export growth; and examines how exporter behavior varies with the stage of development. She was the leader of the team conducting the World Bank study on trade, competitiveness and regional integration in Zimbabwe. She has worked on issues related to regionalism, trade costs and trade and productivity. Before joining the World Bank, she worked as an economist for the Peruvian Government (INDECOPI) and also consulted for the private sector and other international organizations. She has a PhD in economics from the Graduate Institute of International Studies in Geneva, Switzerland and a Master of International Law and Economics from the World Trade Institute in Bern, Switzerland.

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Publication Search Results

Now showing 1 - 10 of 14

Export Surges : The Power of a Competitive Currency

(World Bank, Washington, DC, 2008-10) Freund, Caroline ; Pierola, Martha Denisse

How can countries stimulate and sustain strong export growth? To answer this question, the authors examine 92 episodes of export surges, defined as significant increases in manufacturing export growth that are sustained for at least seven years. They find that export surges in developing countries tend to be preceded by a large real depreciation-which leaves the exchange rate significantly undervalued-and a reduction in exchange rate volatility. In contrast, in developed countries, the role of the exchange rate is less pronounced. The authors examine why the exchange rate is so important in developing countries and find that the depreciation leads to a significant reallocation of resources in the export sector. In particular, depreciation generates more entries into new export products and new markets, and the percentage of new entries that fail after one year declines. These new products and new markets are important, accounting for 25 percent of export growth during the surge in developing countries. The authors argue that maintaining a competitive currency leads firms to expand the product and market space for exports, inducing a large reorientation of the tradable sector.
Exporter Dynamics Database

( 2012-10) Cebeci, Tolga ; Fernandes, Ana M. ; Freund, Caroline ; Pierola, Martha Denisse

This paper introduces the Exporter Dynamics Database. The database includes exporter characteristics and measures of exporter growth based on firm-level customs information from 38 developing and seven developed countries, primarily for the period between 2003 and 2010. The measures are available at different levels of aggregation, including: a) country-year, b) country-year-product, and c) country-year-destination. Several new stylized facts about exporter behavior across countries emerge from the database. (i) Larger or more developed economies have more exporters, larger and more diversified exporters, and lower entry and exit rates than smaller or developing economies. (ii) In the short run, expansions along the intensive margin (exporter size) contribute more to export growth than expansions along the extensive margin (number of exporters). (iii) Exit rates are highly correlated with entry rates and both are negatively correlated with survival rates, average exporter size, and diversification. (iv) The number of exporters and the entry and exit rates in a country-product group are partially driven by country and product-group effects; however, the average size of exporters in a country-product group is not. Although the first three facts can be explained by models incorporating firm heterogeneity and uncertainty, the fourth fact is more difficult to explain with existing models. Several findings are confirmed in this database, including the importance of large multi-product firms. This database can be a valuable tool to improve the understanding of the micro-foundations of export growth, by providing new insights about exporter characteristics and dynamics.
Export Superstars

(World Bank, Washington, DC, 2012-10) Freund, Caroline ; Pierola, Martha Denisse

This paper shows that the top 1 percent of exporters critically shape trade patterns, using firm-level data from 32 countries. In particular, variation in average firm size (the intensive margin) explains over two thirds of the variation in the sector distribution of exports across countries, the remaining share is explained by variation in the number of firms (the extensive margin). Variation in average firm size across sectors is largely driven by variation in the sectoral distribution of exports from the top 1 percent of firms in a country -- export superstars. In contrast, the sectoral distribution of exports from the remaining 99 percent of firms is more similar across countries, and the distribution of the total number of firms across sectors is very similar across countries. This paper also finds that current export superstars typically entered the export market relatively large, reached the top 1 percent after less than three years of exporting, and account for more than half of a country's total exports, export growth and diversification. The results underscore the role of individual firms in determining both trade volumes and trade patterns.
Pathways to African Export Sustainability

(Washington, DC: World Bank, 2012-07-02) Brenton, Paul ; Cadot, Olivier ; Pierola, Martha Denisse

This report provides tentative leads toward such policy prescriptions, based on an overview of the empirical evidence. Chapter one sets the stage by putting Africa's export-survival performance into perspective and proposing a framework that will guide the interpretation of empirical evidence throughout the report. Chapter two covers country-level determinants of export sustainability at origin and destination, including the exporting country's business environment. Chapter three explores some of the firm-level evidence on what drives export sustainability, including uncertainty, incomplete contracts, learning, and networks. Finally, chapter four offers tentative policy implications. The main conclusions from this overview of the causes of Africa's low export sustainability should be taken with caution both because of the complexity of the issue and because of the very fragmentary evidence on which the overview is based. The author should be more cautious in drawing policy implications, as hasty policy prescriptions are the most common trap into which reports of this kind can fall. A first, solid conclusion is that the author needs substantial additional work on the nature and causes of low export survival rates in developing countries to determine the path to high export sustainability.
Exporter Behavior, Country Size and Stage of Development: Evidence from the Exporter Dynamics Database

(World Bank, Washington, DC, 2015-10) Fernandes, Ana M. ; Freund, Caroline ; Pierola, Martha Denisse

This paper presents new data on the micro structure of the export sector for 45 countries and studies how exporter behavior varies with country size and stage of development. Larger countries and more developed countries have more exporters, larger exporters, and a greater share of exports controlled by the top 5 percent. The extensive margin (more firms) plays a greater role than the intensive margin (average size) in supporting exports of larger countries. In contrast, the intensive margin is relatively more important in explaining the exports of richer countries. Exporter entry and exit rates are higher and entrant survival is lower at an early stage of development. The paper discusses the results in light of trade theories with heterogeneous firms and the empirical literature on resource allocation, firm size, and development. An implication from the findings is that developing countries export less because the top of the firm-size distribution is truncated.
Trade in Zimbabwe: Changing Incentives to Enhance Competitiveness

(Washington, DC: World Bank, 2015-05-22) Newfarmer, Richard ; Pierola, Martha Denisse

In Zimbabwe trade has been a driver of economic growth, rising incomes, and progressive empowerment of Zimbabweans through rising standards of living and the promise of better jobs. Since 1980, through good years and bad years, increases in exports have been positively associated with increases in national income. Zimbabwe's location and resource base, together with a low-cost but relatively well educated labor force, have endowed it with a naturally high trade ratio built on a diversified base that facilitates using trade as an engine of growth. While trade volumes have rebounded smartly from the deep recession of 2007-2008, these do not offset other worrisome longer-term trends: 1) export growth during the last decade has been lackluster and failed to drive high growth; 2) agricultural exports, other than tobacco, have lost their once dominant role in the region, and are no longer a source of diversification; 3) manufacturing has withered in a continuing secular decline; and 4) Zimbabwe's export basket has become less diversified and more dependent on a narrow range of mineral and, to a lesser extent, agricultural products. In short, exports have become less diversified, less-technologically sophisticated, and less labor-intensive, and ever more dependent on a few large mining activities to provide foreign exchange and employment. This report traces the roots of this poor performance to several policy issues: poor predictability of macroeconomic policy and economic governance has created an unfavorable climate for private investment and trade; a tariff structure that dampens export profitability; industrial policies (indigenization policy in particular) that undermine investor confidence and inhibits private investment; and finally, competition-limiting policies toward services that limit connectivity of Zimbabweans and raise trade costs. The good news arising from the study is that the remedies for these policy shortcomings lie in Zimbabwean hands. If the government were to adopt reforms that reconfigure economy-wide incentives and trade and industrial policies, it could promote sustained growth, economic diversification and empowerment of poor people.
The Role of Imports for Exporter Performance in Peru

(World Bank, Washington, DC, 2015-11) Pierola, Martha Denisse ; Fernandes, Ana Margarida ; Farole, Thomas

Using highly disaggregated firm-level customs transaction data for imports and exports in Peru over the 2000–2012 period, this paper explores the relationship between imports of intermediate inputs and firm export performance. The paper shows that greater use, variety, and quality of imported intermediate inputs is significantly correlated with higher exports, faster export growth, greater diversification of export markets, and higher quality exports (as measured by relative unit prices) at the firm level. This relationship is robust and persistent to controls for unobserved firm heterogeneity and year fixed effects. The use of imported inputs is also associated with higher productivity at the firm level. Considering the relationship between specific trade policy measures and the import performance of those exporters that are direct importers, the analysis shows that those exposed to higher tariffs and nontariff measures import less in total and exhibit lower import variety. The use of the advanced clearance procedure as the modality to clear customs for imports is favorable to the import performance of exporter-importers, in that the users of the modality import more and import a more diversified bundle of inputs than those that do not use it, even after controlling for firm size.
Export Competitiveness: Why Domestic Market Competition Matters

(World Bank, Washington, DC, 2015-06) Goodwin, Tanja ; Pierola, Martha Denisse

This review of the empirical literature shows that industries with more intense domestic competition will export more. Competition law enforcement can be traced to export performance and is complementary to trade reforms. Pro-competition market regulation that reduces restrictions and promotes competition, where it is viable, is an important determinant for trade. The elimination of barriers to entry and rivalry, and a level playing field in upstream sectors contributes to export competitiveness in downstream manufacturing sectors. In some sectors, effective competition policy can directly lower trade costs.
Export Superstars

(MIT Press, 2015-12) Freund, Caroline ; Pierola, Martha Denisse

We show that very large firms shape country export patterns. Among 32 countries, the top firm on average accounts for 14% of a country’s total (non-oil) exports, and the top five firms make up 30%. These export superstars are also important in the sectoral distribution of exports. Variation in exports from the top firm in a country explains about one-third of the variation in sectoral exports relative to income across countries, and variation in exports from the top five firms explains nearly half. Revealed comparative advantage in a sector can be created by a single firm.
The Origins and Dynamics of Export Superstars

(Published by Oxford University Press on behalf of the World Bank, 2020-02) Freund, Caroline ; Pierola, Martha Denisse

Export superstars are important for export growth and diversification and are typically born large. Firm-level data on manufacturing trade from 32 developing countries show that the top five exporters account for on average nearly one-third of exports, 47 percent of export growth, and a third of the growth due to export diversification over a five-year period. Within countries and industries, export growth is positively correlated with the share of exports in the top five firms. Most of the top five exporters were already large five (or eight) years ago or are new firms; it is rare for these export superstars to emerge from the bottom half of the distribution of firm sizes. For countries where detailed data exist, superstars are producers, not traders, and are primarily foreign owned.