Learning to Export from Neighbors

No 370, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: This paper studies how learning from neighboring firms affects new exporters' performance. We develop a statistical decision model in which a firm updates its prior belief about demand in a foreign market based on several factors, including the number of neighbors currently selling there, the level and heterogeneity of their export sales, and the firm's own prior knowledge about the market. A positive signal about demand inferred from neighbors' export performance raises the firm's probability of entry and initial sales in the market but, conditional on survival, lowers its post-entry growth. These learning effects are stronger when there are more neighbors to learn from or when the firm is less familiar with the market. We find supporting evidence for the main predictions of the model from transaction-level data for all Chinese exporters from 2000 to 2006. Our findings are robust to controlling for firms' supply shocks, countries' demand shocks, and city-country fixed effects.

Keywords: learning to export; knowledge spillover; uncertainty; export dynamics (search for similar items in EconPapers)
JEL-codes: F1 F2 (search for similar items in EconPapers)
Pages: 46
Date: 2014-06-26, Revised 2014-06-26
New Economics Papers: this item is included in nep-bec, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (84)

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Related works:
Journal Article: Learning to export from neighbors (2014)
Working Paper: Learning to Export from Neighbors (2014)
Working Paper: Learning to export from neighbors (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:370

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