What Explains the Low Survival Rate of Developing Country Export Flows?

Paul Brenton, Christian Saborowski and Erik von Uexkull

Chapter 17 in International Trade, Distribution and Development:Empirical Studies of Trade Policies, 2014, pp 347-372 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Successful export growth and diversification require not only entry into new export products and markets but also the survival and growth of export flows. For a crosscountry dataset of product-level bilateral export flows, exporting is found to be a perilous activity, especially in low-income countries. Unobserved individual heterogeneity in product-level export flow data prevails even when a wide range of observed country and product characteristics are controlled for. This questions previous studies that used the Cox proportional hazards model to analyze export survival. Following Meyer (1990), a Prentice-Gloeckler (1978) model is estimated, amended with a gamma mixture distribution summarizing unobserved individual heterogeneity. The empirical results confirm the significance of a range of product- as well as country specific factors in determining the survival of new export flows. Important for policymaking is the finding of the value of learning-by-doing for export survival: experience with exporting the same product to other markets or different products to the same market is found to strongly increase the chance of export survival. A better understanding of such learning effects could substantially improve the effectiveness of export promotion strategies. Export survival, Cox proportional hazard, low-income countries.

Keywords: Trade; Economic Development; Empirical Studies; Modelling (search for similar items in EconPapers)
Date: 2014
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Journal Article: What Explains the Low Survival Rate of Developing Country Export Flows? (2010)
Working Paper: What explains the low survival rate of developing country export flows ? (2009)
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