Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155512
Authors: 
Pelkmans-Balaoing, E.O. Annette
van Heuvelen, Gerrit Hugo
Viaene, Jean-Marie
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 6270
Abstract: 
This paper explores firms’ export dynamics in emerging economies where local firms face stiff foreign competition, both at home and abroad, and thus compelled to choose the level of quality in which to export. We develop and test a model of vertical product differentiation where the link between export performance and product quality is central. The impact of other governmental decisions related to multiple uncertainties faced by exporters such as exchange rate, freight and trade policies, are investigated as well. A rich and new firm-level data base is employed, which matches the firm-coded trade transactions data (7-digit) of Philippine manufacturing firms, with their corresponding firm survey data from 1996-2007. Using discrete survival analysis, we show that export spells have a short duration, 20 months on average. Particularly 72.2% of trade relationships in year one do not survive to year two. Market uncertainties, particularly those linked to exchange rates and transport costs increase the probability of firm exit as expected. Export survival rates are highest among firms that select an export price contained in the interval between the median and mean of the international distribution of product prices. In contrast, those choosing a price located at both ends of this distribution have the least chance of survival.
Subjects: 
intra-product trade
product quality
firm dynamics
survival analysis
multiple uncertainty
JEL: 
F10
F14
Document Type: 
Working Paper

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