Understanding Informational Barriers to Trade Using the Scope of Exported Products and U.S. State Exporting Promotion Programs

The relationship between a firm's export decisions and informational barriers to trade is not well understood. Firm-level trade models often assume a fixed cost to trade in order to match currently known facts about the ratio of firms that export. But without more detailed data on the binary (yes or no) export decision, the important problem of the size and nature of informational barriers to trade remains. This lack of knowledge is due, in part, to transaction-level export data collected by the Census Bureau not being compiled into the necessary statistics or linked to other data. In particular, linked data on the scope of state exports, the informational requirements needed to purchase a good, and state export promotion programs do not currently exist. Such a combination of data is needed to provide evidence of how firms respond to informational barriers to trade as proxied by the innate informational requirement of the exported good and the amount of export promotion. This project improves the quality of Census Bureau data by compiling a variable on export scope, the number of unique products being exported at the state level by foreign market.