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Export‐Market Dynamics And The Probability Of Firm Closure: Evidence For The United Kingdom

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  • Richard I. D. Harris
  • Qian Cher Li

Abstract

This study presents the first empirical analysis of the determinants of firm closure in the United Kingdom with an emphasis on the role of export‐market dynamics, using panel data for a nationally representative group of firms operating in all‐market‐based sectors during 1997–2003. Our findings show that the probability of closure is (cet. par.) significantly lower for exporters, particularly those experiencing export‐market entry and exit. Having controlled for other attributes associated with productivity (such as size and export status), the following factors are found to increase the firm's survival prospects: higher capital intensity and TFP, foreign ownership, young age, displacement effects (through relatively high rates of entry of firms in each industry), and belonging to certain industries. Interestingly, increased import penetration (a proxy for lower trade costs) leads to a lower hazard rate for exporting entrants and continuous exporters, while inducing a higher hazard rate for domestic producers or those that quit exporting.

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  • Richard I. D. Harris & Qian Cher Li, 2010. "Export‐Market Dynamics And The Probability Of Firm Closure: Evidence For The United Kingdom," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(2), pages 145-168, May.
    • Handle: RePEc:bla:scotjp:v:57:y:2010:i:2:p:145-168
    DOI: 10.1111/j.1467-9485.2010.00511.x
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    3. Iwasaki, Ichiro & 岩﨑, 一郎 & イワサキ, イチロウ, 2012. "Global Financial Crisis, Corporate Governance, and Firm Survival: The Case of Russia," RRC Working Paper Series 37, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
    4. Raymond Robertson & Drusilla Brown & Rajeev Dehejia, 2021. "Working conditions and factory survival: Evidence from better factories Cambodia," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 228-254, February.
    5. Vu, Van Huong, 2012. "Private manufacturing SMEs survival and growth in Vietnam: The role of export participation," MPRA Paper 42489, University Library of Munich, Germany.
    6. Holger Breinlich & Patrick Nolen & Greg C Wright, 2020. "Is publicly-reported firm-level trade data reliable? Evidence from the UK," PLOS ONE, Public Library of Science, vol. 15(11), pages 1-10, November.
    7. Görg, Holger & Spaliara, Marina-Eliza, 2018. "Export market exit and financial health in crises periods," Journal of Banking & Finance, Elsevier, vol. 87(C), pages 150-163.
    8. Iwasaki, Ichiro & 岩﨑, 一郎, 2013. "Global Financial Crisis, Corporate Governance, and Firm Survival: The Russian Experience," RRC Working Paper Series 37_v2, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
    9. Holger Görg & Marina-Eliza Spaliara, 2014. "Financial Health, Exports and Firm Survival: Evidence from UK and French Firms," Economica, London School of Economics and Political Science, vol. 81(323), pages 419-444, July.
    10. Ina Jäkel, 2014. "Import-push or export-pull? An industry-level analysis of the impact of trade on firm exit," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 747-775, November.
    11. Iwasaki, Ichiro, 2014. "Global financial crisis, corporate governance, and firm survival:," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 178-211.

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