Firm‐level export duration: The importance of market‐specific ownership linkages

Crt Kostevc and Katja Zajc Kejžar

The World Economy, 2020, vol. 43, issue 5, 1277-1308

Abstract: This paper explores the impact of a firm's market‐specific ownership linkages and trade complementarities on different dimensions of its exporting longevity. Unlike previous studies that were mostly based on country‐product‐level data, this paper uses transaction‐level trade data on the population of firms in Slovenia in the 2002–11 period, matched with detailed origin/direction of inward/outward FDI information to determine a firm's integration in international production networks. Our results indicate that firm's bilateral inward and outward FDI flows with an export‐destination country have a strong positive effect on a firm's export survival in that market. Importance of market‐specific ownership linkages for export duration is exclusively driven by intermediate goods which suggests prolonged export duration through production network involvement. However, the perseverance effect of bilateral FDI ties on export spells has been weakened during the crisis period. We find pronounced market‐ and product‐related trade complementarities as either exporting or importing experience with the relevant market/product substantially improves the chances of a product–market export spell continuing. Finally, the risk of exports termination is lower for a firm's core export products.

Date: 2020
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