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Author: Mark J. Roberts Publisher: World Bank Publications ISBN: Category : Languages : en Pages : 44
Book Description
March 1995 Exports respond unpredictably to a change in real exchange rates, suggests evidence from the 1980s. Recent theoretical work explains this as a consequence of the sunk costs associated with breaking into foreign markets. Sunk costs include the cost of packaging, upgrading product quality, establishing marketing channels, and accumulating information on demand sources. The authors use micro panel data to estimate a dynamic discrete-choice model of participation in export markets, a model derived from the Krugman-Baldwin sunk-cost hysteresis framework. Applying the model to data on manufacturing plants in Colombia (1981-89), they test for the presence of sunk entry costs and quantify the importance of those costs in explaining export patterns. The econometric results reject the hypothesis that sunk costs are zero. The results, which control for both observed and unobserved sources of plant heterogeneity, indicate that prior export market experience has a substantial effect on the probability of exporting, but its effect depreciates fairly quickly. The reentry costs of plants that have been out of the export market for a year are substantially lower than the costs of a first-time exporter. After a year out of the export market, however, the reentry costs are not significantly different from the entry costs. Plant characteristics are also associated with export behavior: large old plants owned by corporations are more likely to export than other plants. Variations in plant-level cost and demand conditions have much less effect on the profitability of exporting than variations in macroeconomic conditions and sunk costs do. It appears especially difficult to break into foreign markets during periods of world recession.
Author: Mark J. Roberts Publisher: World Bank Publications ISBN: Category : Languages : en Pages : 44
Book Description
March 1995 Exports respond unpredictably to a change in real exchange rates, suggests evidence from the 1980s. Recent theoretical work explains this as a consequence of the sunk costs associated with breaking into foreign markets. Sunk costs include the cost of packaging, upgrading product quality, establishing marketing channels, and accumulating information on demand sources. The authors use micro panel data to estimate a dynamic discrete-choice model of participation in export markets, a model derived from the Krugman-Baldwin sunk-cost hysteresis framework. Applying the model to data on manufacturing plants in Colombia (1981-89), they test for the presence of sunk entry costs and quantify the importance of those costs in explaining export patterns. The econometric results reject the hypothesis that sunk costs are zero. The results, which control for both observed and unobserved sources of plant heterogeneity, indicate that prior export market experience has a substantial effect on the probability of exporting, but its effect depreciates fairly quickly. The reentry costs of plants that have been out of the export market for a year are substantially lower than the costs of a first-time exporter. After a year out of the export market, however, the reentry costs are not significantly different from the entry costs. Plant characteristics are also associated with export behavior: large old plants owned by corporations are more likely to export than other plants. Variations in plant-level cost and demand conditions have much less effect on the profitability of exporting than variations in macroeconomic conditions and sunk costs do. It appears especially difficult to break into foreign markets during periods of world recession.
Author: Mark J. Roberts Publisher: ISBN: Category : Languages : en Pages : 44
Book Description
Exports respond unpredictably to a change in real exchange rates, suggests evidence from the 1980s.Recent theoretical work explains this as a consequence of the sunk costs associated with breaking into foreign markets. Sunk costs include the cost of packaging, upgrading product quality, establishing marketing channels, and accumulating information on demand sources. The authors use micro panel data to estimate a dynamic discrete - choice model of participation in export markets, a model derived from the Krugman-Baldwin sunk - cost hysteresis framework. Applying the model to data on manufacturing plants in Colombia (1981-89), they test for the presence of sunk entry costs and quantify the importance of those costs in explaining export patterns. The econometric results reject the hypothesis that sunk costs are zero. The results, which control for both observed and unobserved sources of plant heterogeneity, indicate that prior export market experience has a substantial effect on the probability of exporting, but its effect depreciates fairly quickly. The reentry costs of plants that have been out of the export market for a year are substantially lower than the costs of a first-time exporter. After a year out of the export market, however, the reentry costs are not significantly different from the entry costs. Plant characteristics are also associated with export behavior: large old plants owned by corporations are more likely to export than other plants. Variations in plant-level cost and demand conditions have much less effect on the profitability of exporting than variations in macroeconomic conditions and sunk costs do. It appears especially difficult to break into foreign markets during periods of world recession.
Author: Evis Sinani Publisher: ISBN: Category : Languages : en Pages : 42
Book Description
This paper investigates the importance of sunk costs, firm characteristics and spillovers from nearby exporters on a firm's export participation decision. The empirical analysis involves the estimation of a non-structural, discrete choice, dynamic model with firm heterogeneity. The results suggest that both sunk costs and observable firm characteristics are important determinants of export market participation. In addition, previous history matters, in that, if a firm has been exporting the last period or the period before that it significantly increases the likelihood of the firm exporting in the current period. This conclusion is robust across all specifications. Also, larger firms with high capital intensity and foreign owned are more likely be exporters. Finally, while there is no clear evidence on export spillovers, if a firm operates in an export-oriented industry increases the likelihood of exporting. Dynamic Panel, sunk costs, export decision.
Author: Evis Sinani Publisher: ISBN: Category : Languages : en Pages :
Book Description
Abstract: In this paper we investigate the importance of sunk costs, firm characteristics and spillovers from nearby exporters on a firm's decision to participate in exporting. The empirical analysis involves the estimation of a non-structural, discrete choice, dynamic model with firm heterogeneity. By using panel data for Estonian companies from 1994 to 1999 we find that: (i) both sunk costs and observable firm characteristics are important determinants of export market participation; (ii) previous history matters, in that, if a firm has been exporting the previous period or the period before, it significantly increases the likelihood of the firm exporting in the current period; (iii) larger firms with high capital intensity and foreign ownership are more likely to be exporters; (iv) operating in an export-oriented industry increases a firm's likelihood of exporting
Author: Peter A. G. van Bergeijk Publisher: Cambridge University Press ISBN: 1139488287 Category : Business & Economics Languages : en Pages : 373
Book Description
How do borders affect trade? Are cultural and institutional differences important for trade? Is environmental policy relevant to trade? How does one's income or wage relate to the fact that trade partners are nearby or far away? These are just some of the important questions that can be answered using the gravity model of international trade. This model predicts and explains bilateral trade flows in terms of the economic size and distance between trading partners (e.g. states, regions, countries, trading blocs). In recent years, there has been a surge of interest in this model and it is now one of the most widely applied tools in applied international economics. This book traces the history of the gravity model and takes stock of recent methodological and theoretical advances, including new approximations for multilateral trade resistance, insightful analyses of the measurement of economic distance and analyses of foreign direct investment.
Author: Joakim Gullstrand Publisher: ISBN: Category : Languages : en Pages : 29
Book Description
In endeavouring to explain the empirical puzzle that the sunk costs of exporting are important, but that, at the same time, trade flows do not, on average, survive for very long, this paper explores the concepts of core and peripheral markets. First, it illustrates that if the importance of sunk costs as well as the expected future returns from exporting are different, depending on whether the export decision refers to a core or a peripheral market, it is plausible that while firms will tend to stay on the core market for a long time, they will enter and exit the peripheral market much more frequently. Second, using firm-product-destination-specific export data for all firms in the Swedish food chain for the period 1997-2007, an empirical test is carried out to ascertain whether there is support for the hypothesis that trade duration will be longer for core markets. Employing two variables that capture different aspects of the core/periphery dimension, it is found that firms will indeed tend to stay longer in their core markets, while export decisions regarding peripheral markets are much less long-term. The conclusion, therefore, is that the empirical puzzle can be explained by taking into account the fact that the trade hysteresis literature builds on data on the core market decision to export or not, and that the trade survival literature also includes data on decisions to stay in or exit peripheral markets.
Author: John Kuada Publisher: Adonis & Abbey Publishers Ltd ISBN: 1912234424 Category : Reference Languages : en Pages : 248
Book Description
Economic growth is one of the most cost-effective ways of dealing with poverty in Africa. Growth lifts many people out of poverty and at the same time generates the government revenues necessary for investments within the social sector. Thus the design and implementation of business development policies remains a major challenge in most African countries. This entails supporting businesses to be integrated within the global economic structure without being easy victims of unscrupulous and opportunistic investors. During the past two decades successive Ghanaian governments have implemented private sector development policies aimed at stimulating growth through internationalisation of local enterprises and attracting foreign investors. Contributors to the volume provide an overview of the impact of these policies on the Ghanaian business environment and the strategic orientations of managers. They also offer an insight into the productivity and performance of exporting firms, the financial and knowledge acquisition strategies they adopt, their degree of market orientation and corporate social responsibility and the challenges faced by African policy makers and managers learning to operate within an increasingly turbulent global economy. The book situates the Ghanaian experience within the broader context of African economic growth and calls for African economic integration as a platform on which African firms can build their competitiveness and operate more effectively within the global economy.
Author: Sheila A Gutierrez de Pineres Publisher: Routledge ISBN: 1351786016 Category : Social Science Languages : en Pages : 188
Book Description
This title was first published in 2000: This text aims to be essential reading for anyone who wishes to understand the microeconomic foundations behind the Latin American export boom, the ways in which government policies affecting exports may retard or promote economic growth, and the future prospects of the proposed Free Trade Association of the Americas. The authors conduct an econometric analysis which uses measures of export diversification, structural change in exports, and exports similarity which provide a basis for region-wide comparisons. The cases of Chile, Colombia, Mexico and Venezuela are analyzed in particular detail. Cross-country analysis focuses on the potential role of export diversification in promoting economic growth, in the context of other important determinants of growth.
Author: A Ganesh-Kumar Publisher: Routledge ISBN: 113438307X Category : Business & Economics Languages : en Pages : 185
Book Description
Using India as a case study, this well-written, concise book covers everything one needs to know to understand how a country becomes internationally competitive. Showing that reforms that pertain to the real sector alone, such as industrial deregulation and trade reforms, are not enough to enhance a country's competitiveness, this book makes a compelling case for complimentary financial sector reforms. Of interest to academics studying international trade, industrial economics and development economics, this book is also guaranteed to be extremely useful for professional economists and those involved with policy making in developed and developing countries.
Author: Mark J. Roberts
Author: Mark J. Roberts
Author: Mark J. Roberts
Author: Mark J. Roberts
Author: Evis Sinani
Author: Evis Sinani
Author: Peter A. G. van Bergeijk
Author: Joakim Gullstrand
Author: John Kuada
Author: Sheila A Gutierrez de Pineres
Author: A Ganesh-Kumar