Local Export Spillovers within and between Industries in Japan

This study empirically tests the hypothesis that neighboring exporters increase the probability of export market entry (extensive margin) and export values (intensive margin). As mentioned in the international trade literature, export initiation requires additional fixed entry costs, and therefore, a high productivity is required to earn a positive profit. If neighboring establishments are already exporting, the necessary information for initiating exports is available in those areas, thus lowering entry costs. Prior studies provide mixed evidence on local export spillovers and need further validation. Using panel data on Japanese manufacturing establishments, this study provides evidence regarding intra-industry local export spillover effects on the extensive and intensive margins of exports; however, evidence concerning inter-industry local export spillovers is limited.