Coping with the crisis and export diversification

Kaleb Girma Abreha, Valérie Smeets and Frédéric Warzynski

The World Economy, 2020, vol. 43, issue 5, 1452-1481

Abstract: Using a highly disaggregated firm–product–destination level data from Denmark, we analyse how Danish exporters responded to the global recession in 2008–09 and the recovery that followed. We show that firms reacted mainly by adjusting their scale of export shipments and by extending their export portfolio outside of their core products and markets. More importantly, we also find that export diversification into fast‐growing economies like China was associated with better export growth performance. Hence, trade reorientation beyond traditional market destinations accelerated export growth and as such constitutes an important mechanism for understanding the various determinants of firm heterogeneity.

Date: 2020
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