Diversification, Networks and the Survival of Exporting Firms

Jorge Tovar and Luis Martinez ()

No 8733, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: There is abundant empirical evidence testing models where comparative advantage arises from firm heterogeneity. As of today it is relatively clear who exports and why a firm decides to export. But, what determines the survival of a firm in the export market? This paper exploits a detailed developing economy monthly firm-level dataset for the period 2001 - 2008 in order to explore the importance of trade networks and product and market diversification on the survival of exporting firms.We find that market diversification prevails over product diversification while tradenetwork effects, measured in various ways, are highly correlated to the survival of new exporting firms. From a policy perspective our findings suggest that government aid in the exporting process should focus on expanding into new markets, not on promoting new export products.

Keywords: Firm dynamics; product diversification; market diversification; survival; trade networks. (search for similar items in EconPapers)
JEL-codes: F14 L25 (search for similar items in EconPapers)
Pages: 46
Date: 2011-03-06
New Economics Papers: this item is included in nep-cse, nep-int and nep-net
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:008733

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