IDEAS home Printed from https://ideas.repec.org/p/ags/aaea10/61481.html
   My bibliography  Save this paper

History matters for the export decision and the volume exported: Firm-level evidence from French agri-food firms

Author

Listed:
  • Latouche, Karine
  • Shonkwiler, John Scott
  • Chevassus-Lozza, Emmanuelle

Abstract

As a result of the rapid growth of microeconometric studies of exporting firms, we know quite a lot about the hysteresis occurring in the current decision of firms to export. Firms entering a foreign market the previous year are more likely to export the current year. This fact is traditionally interpreted as a consequence of sunk export costs at entry to the international market. These costs are for instance the knowledge of foreign markets, the search for new distribution networks, or the compliance with border crossing standards specific to a given market. The specificity of the destination market appears as being of huge importance for the firms. Papers in this field propose to test for the existence of sunk-cost hysteresis by analysing entry and exit patterns in plant-level panel data, whatever the destination market. Roberts and Tybout (1997) or Özler et al. (2009) develop and estimate a dynamic discrete-choice model of the plant’s current exporting status in Colombia or Turkey respectively. Only a few studies have accounted either for the destination of the exports or for the volume exported. Blanes-Cristobal et al. (2008) show that previous experience on a market has a positive impact on the probability of current export on this market. Das et al. (2007) consider both the decision to export and the value exported in a dynamic model. They show that entry costs on international markets (whatever the destination market) are substantial. The questions addressed by this study are: Are sunk costs a feature of the firm's export behavior (decision and volume) and do they vary across export markets? A multivariate dynamic panel model of French agribusiness firms' exports to two aggregate markets (EU and Rest of the World) is specified. The model accounts for both zero level and positively skewed exports by adopting the Cragg (1971) logarithmic Tobit model. Unobserved firm-level heterogeneity is accounted for by introducing random effects which may be correlated across export markets. The initial conditions problem is treated by assuming that a component of the unobserved firm effect is conditional on initial values and exogenous variables (Wooldridge, 2005). As a consequence the degree of structural state dependence can be estimated for each export market. Previous export experience in both markets is hypothesized to impact both the decision to export and the level of exports in each market.

Suggested Citation

  • Latouche, Karine & Shonkwiler, John Scott & Chevassus-Lozza, Emmanuelle, 2010. "History matters for the export decision and the volume exported: Firm-level evidence from French agri-food firms," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61481, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61481
    DOI: 10.22004/ag.econ.61481
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/61481/files/Poster_11233_AAEA.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.61481?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Özler, Sule & Taymaz, Erol & YIlmaz, Kamil, 2009. "History Matters for the Export Decision: Plant-Level Evidence from Turkish Manufacturing Industry," World Development, Elsevier, vol. 37(2), pages 479-488, February.
    2. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54, January.
    3. Sanghamitra Das & Mark J. Roberts & James R. Tybout, 2007. "Market Entry Costs, Producer Heterogeneity, and Export Dynamics," Econometrica, Econometric Society, vol. 75(3), pages 837-873, May.
    4. Campa, Jose Manuel, 2004. "Exchange rates and trade: How important is hysteresis in trade?," European Economic Review, Elsevier, vol. 48(3), pages 527-548, June.
    5. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    6. Blanes-Cristóbal, José Vicente & Dovis, Marion & Milgram-Baleix, Juliette & Moro-Egido, Ana I., 2008. "Do sunk exporting costs differ among markets? Evidence from Spanish manufacturing firms," Economics Letters, Elsevier, vol. 101(2), pages 110-112, November.
    7. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    8. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-564, September.
    9. Ulrich Kaiser & Hans Kongsted, 2008. "True versus spurious state dependence in firm performance," Empirical Economics, Springer, vol. 35(2), pages 207-228, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gianmarco Ottaviano & Christian Volpe Martincus, 2011. "SMEs in Argentina: who are the exporters?," Small Business Economics, Springer, vol. 37(3), pages 341-361, October.
    2. Eleonora Fichera & Yevgeniya Shevtsova, 2020. "Sunk exporting costs and export market coverage," Manchester School, University of Manchester, vol. 88(4), pages 599-616, July.
    3. M. Padmaja & Subash Sasidharan, 2017. "Sunk Costs, Firm Heterogeneity, Export Market Entry and Exit: Evidence from India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 15(2), pages 367-393, June.
    4. Wei, Xuan & Thornsbury, Suzanne, 2011. "Information Cost As A Prior Hurdle to Exporting," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103622, Agricultural and Applied Economics Association.
    5. Bruce A. Blonigen & Lionel Fontagné & Nicholas Sly & Farid Toubal, 2019. "Cherries for Sale: The Incidence and Timing of Cross-border M&A," World Scientific Book Chapters, in: Foreign Direct Investment, chapter 4, pages 121-177, World Scientific Publishing Co. Pte. Ltd..
    6. Philipp Meinen, 2015. "Sunk costs of exporting and the role of experience in international trade," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(1), pages 335-367, February.
    7. Özler, Sule & Taymaz, Erol & YIlmaz, Kamil, 2009. "History Matters for the Export Decision: Plant-Level Evidence from Turkish Manufacturing Industry," World Development, Elsevier, vol. 37(2), pages 479-488, February.
    8. Lota D. Tamini & Maurice Doyon & Rodrigue Simon, 2016. "Analyzing Trade Liberalization Effects in the Egg Sector Using a Dynamic Gravity Model," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(2), pages 383-411, June.
    9. Gullstrand, Joakim, 2011. "Firm and destination-specific export costs: The case of the Swedish food sector," Food Policy, Elsevier, vol. 36(2), pages 204-213, April.
    10. M. Padmaja & Subash Sasidharan, 2021. "Financing constraints and exports: evidence from India," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(1), pages 118-145, January.
    11. Pedro Albarran & Raquel Carrasco & Adelheid Holl, 2013. "Domestic transport infrastructure and firms’ export market participation," Small Business Economics, Springer, vol. 40(4), pages 879-898, May.
    12. Giordano, Claire & Lopez-Garcia, Paloma, 2019. "Firm heterogeneity and trade in EU countries: a cross-country analysis," Occasional Paper Series 225, European Central Bank.
    13. Halldin, Torbjörn, 2012. "External finance, collateralizable assets and export market entry," Working Paper Series in Economics and Institutions of Innovation 268, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    14. Joakim Gullstrand & Maria Persson, 2015. "How to combine high sunk costs of exporting and low export survival," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(1), pages 23-51, February.
    15. Emanuele Forlani, 2017. "Irish Firms’ Productivity and Imported Inputs," Manchester School, University of Manchester, vol. 85(6), pages 710-743, December.
    16. Alvarez, Roberto, 2007. "Explaining Export Success: Firm Characteristics and Spillover Effects," World Development, Elsevier, vol. 35(3), pages 377-393, March.
    17. Handley, Kyle, 2014. "Exporting under trade policy uncertainty: Theory and evidence," Journal of International Economics, Elsevier, vol. 94(1), pages 50-66.
    18. Li, Shengyu, 2018. "A structural model of productivity, uncertain demand, and export dynamics," Journal of International Economics, Elsevier, vol. 115(C), pages 1-15.
    19. Flora Bellone & Patrick Musso & Lionel Nesta & Stefano Schiavo, 2008. "Financial Constraints as a Barrier to Export Participation," SciencePo Working papers Main hal-01074250, HAL.
    20. Roberto Álvarez & Ricardo A. López, 2009. "Skill Upgrading and the Real Exchange Rate," The World Economy, Wiley Blackwell, vol. 32(8), pages 1165-1179, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea10:61481. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.