Publication: What Explains the Low Survival Rate of Developing Country Export Flows?
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2009-06-01
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Published
2009-06-01
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Abstract
Successful export growth and diversification require not only entry into new export products and markets, but also the survival and growth of export flows. This paper uses a detailed, cross-country dataset of product level bilateral export flows to illustrate that exporting is an extremely perilous activity and especially so in low-income countries. The authors find that unobserved individual heterogeneity in product-level export flow data prevails despite controlling for a wide range of observed country and product characteristics. This questions previous studies that have used the Cox proportional hazards model to model export survival. The authors estimate a Prentice-Gloeckler model, amended with a gamma mixture distribution summarizing unobserved individual heterogeneity. The empirical results confirm the significance of a range of products as well as country-specific factors in determining the survival of export flows. From a policy perspective, an interesting finding is the importance of learning-by-doing for export survival: experience with exporting the same product to other markets or different products to the same market are found to strongly increase the chance of export survival. A better understanding of such learning effects could substantially improve the effectiveness of export promotion strategies.
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“Saborowski, Christian; Brenton, Paul; von Uexkull, Erik. 2009. What Explains the Low Survival Rate of Developing Country Export Flows?. Policy Research working paper ; no. WPS 4951. © World Bank. http://hdl.handle.net/10986/4148 License: CC BY 3.0 IGO.”
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