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Benefits of forced experimentation on exports

Juan de Lucio (), Raúl Mínguez, Asier Minondo () and Francisco Requena Silvente ()
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Raúl Mínguez: Universidad Nebrija. Calle de Santa Cruz de Marcenado, 27, 28015, Madrid (Spain).

No 1812, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: The severe reduction in domestic demand between 2008 and 2013 in Spain forced many firms to seek new customers in foreign markets. In this paper, we explore whether the increase in the crisis-motivated number of new exporters led to a larger number of regular exporters once domestic demand returned to pre-crisis levels. Using an instrumental variable approach, we find that a 10% increase in new exporters led to a 5% increase in new regular exporters. Since the economic crisis was not anticipated in Spain, our results establish a causal link between experimentation in foreign markets and discovery of new regular exporters. This evidence is consistent with alternative narratives where _rms had capacity constraints, were uncertain about the pro_tability of their export operations, and averse to risk or satis_ed with their non-exporter status prior to the crisis.

Keywords: capacity constraints; risk aversion; experimentation; exports; Spain; Great Recession (search for similar items in EconPapers)
JEL-codes: F10 F23 (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-eec and nep-int
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