Multi-Product Exporters : Diversification and Micro-Level Dynamics
Recent developments in trade theory, especially research on multi-product firms, have not been matched by similar progress on the empirical front. This paper aims to fill this gap by presenting a novel set of stylized facts on firm-product dynamics...
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| Language: | English |
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World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2008/09/9876468/multi-product-exporters-diversification-micro-level-dynamics http://hdl.handle.net/10986/6965 |
| Summary: | Recent developments in trade theory,
especially research on multi-product firms, have not been
matched by similar progress on the empirical front. This
paper aims to fill this gap by presenting a novel set of
stylized facts on firm-product dynamics observed during an
export boom. This exercise is possible thanks to a unique
firm-product level dataset covering about 85 percent of
Mexican industrial output for the period 1994-2003. The main
findings are as follows. First, there is a substantial
degree of product turnover at the firm-product level in
response to declining trade costs. Second, "core
competencies" - the fact that firms have a cost
advantage or greater expertise at manufacturing some of
their products - are the main driver of firms' decision
to introduce or drop export products. Third, new exporters
tend to "start small" in terms of both values and
number of exported products. Fourth, even if the expansion
in the number of exported products played a role in
stimulating Mexican exports, the growth in volume of
pre-existing products was the main driver of the export
boom. Finally, the introduction of new export products is
preceded by a surge in investment. These findings are in
line with many, but not all, predictions of recent
theoretical work. |
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