Publication: What Explains the Low Survival Rate of Developing Country Export Flows?
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Date
2011-03-30
ISSN
1564-698X
Published
2011-03-30
Author(s)
von Uexkull, Erik
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. For a cross-country dataset of product-level bilateral export flows, exporting is found to be a perilous activity, especially in low-income countries. Unobserved individual heterogeneity in product-level export flow data prevails even when a wide range of observed country and product characteristics are controlled for. This questions previous studies that used the Cox proportional hazards model to analyze export survival. Following Meyer (1990), a Prentice-Gloeckler (1978) model is estimated, amended with a gamma mixture distribution summarizing unobserved individual heterogeneity. The empirical results confirm the significance of a range of product- as well as country-specific factors in determining the survival of new export flows. Important for policymaking is the finding of the value of learning-by-doing for export survival: experience with exporting the same product to other markets or different products to the same market is 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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Citation
“Brenton, Paul; von Uexkull, Erik. 2011. What Explains the Low Survival Rate of Developing Country Export Flows?. World Bank Economic Review. © World Bank. http://hdl.handle.net/10986/13449 License: CC BY-NC-ND 3.0 IGO.”
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Journal
World Bank Economic Review
1564-698X