New exports from emerging markets: do followers benefit from pioneers ?

Since Arrow (1962), spillovers from pioneer to follower in non-excludable innovations are central to our understanding of endogenous economic growth. Nonetheless, evidence of these spillovers in less-developed economies has been elusive. Our paper contributes by showing novel facts consistent with externalities in new export products. To avoid biases towards ex-post successes, we use data on the universe of customs transactions from Chile (1990- 2006). We find that, first, follower firms are more likely to enter a product if the pioneer firm survives exporting. More importantly, we also find that pioneers enter and remain smaller than followers, which is indicative that the first exporter may not be the firm that benets the most from the discovery. This fact is inconsistent with the currently standard view in international trade, in which the largest firm would be the first willing to pay a homogeneous sunk cost of exporting. In contrast, our facts are consistent with the view that smaller pioneer exporters are data producers, whose spillovers benet larger followers. We offer a simple model to formalize this intuition, based on the idea that large exporters have more choices on how to allocate their managerial capacity. This real option makes large exporters wait, as to assign their marginal manager on the best possible project. In contrast, smaller and more focused firms prefer to be pioneers.economic growth; innovation; externalities; first-mover-advantage

Decomposing world export growth and the relevance of new destinations

Looking to understand what drives countries' export growth in practice, I provide a decomposition of world export growth at the product variety level between new destinations, new products, and growth in value of old varieties. New destinations play a significant role, accounting for 37 percent of the growth in developing countries. By comparison, entry into new product categories -a margin that has received considerable attention- explains just 7 percent of export growth. Exploring the nature of destination expansion reveals it is neither automatic nor permanent. Even relatively competitive sectors face difficulties penetrating new destinations, and these difficulties are negatively correlated with population size and GDP per capita. Consistent with pervasive experimentation and failure, more than a third of all products in new destinations exported only once to a destination in the sixteen years studied

Decomposing world export growth and the relevance of new destinations

Looking to understand what drives countries' export growth in practice, I provide a decomposition of world export growth at the product variety level between new destinations, new products, and growth in value of old varieties. New destinations play a significant role, accounting for 37 percent of the growth in developing countries. By comparison, entry into new product categories -a margin that has received considerable attention- explains just 7 percent of export growth. Exploring the nature of destination expansion reveals it is neither automatic nor permanent. Even relatively competitive sectors face difficulties penetrating new destinations, and these difficulties are negatively correlated with population size and GDP per capita. Consistent with pervasive experimentation and failure, more than a third of all products in new destinations exported only once to a destination in the sixteen years studied.International trade; export growth; destinations; export growth decomposition; extensive margin

Gravity and extended gravity: estimating a structural model of export entry

Exporters continuously enter and exit individual foreign markets. Although a given firm's status as an exporter tends to be persistent, the set of destination countries that a firm serves changes frequently. In this paper we empirically examine the determinants of a firm's choice of destination countries and show that their export paths follow systematic patterns. We develop a model of export dynamics where firms decide in each period the countries to which they sell. Our model allows prots from each possible destination country to depend on: (a) how similar it is to the firm's home country (gravity), and (b) how similar it is to other destinations to which the firm has previously exported (extended gravity). Given the enormous number of possible export paths from which firms may choose, conventional estimation approaches based on discrete choice models are unfeasible. Instead, we use a moment inequalities approach. Our inequalities come from applying an analogue of Euler's perturbation method to a discrete choice setting. We show that standard gravity forces have a much larger influence on sunk costs than on fixed costs of exporting and that extended gravity effects can be substantial.gravity; extended gravity; export dynamics; moment inequalities

New exports from emerging markets: do followers benefit from pioneers ?

Since Arrow (1962), spillovers from pioneer to follower in non-excludable innovations are central to our understanding of endogenous economic growth. Nonetheless, evidence of these spillovers in less-developed economies has been elusive. Our paper contributes by showing novel facts consistent with externalities in new export products. To avoid biases towards ex-post successes, we use data on the universe of customs transactions from Chile (1990- 2006). We find that, first, follower firms are more likely to enter a product if the pioneer firm survives exporting. More importantly, we also find that pioneers enter and remain smaller than followers, which is indicative that the first exporter may not be the firm that benets the most from the discovery. This fact is inconsistent with the currently standard view in international trade, in which the largest firm would be the first willing to pay a homogeneous sunk cost of exporting. In contrast, our facts are consistent with the view that smaller pioneer exporters are data producers, whose spillovers benet larger followers. We offer a simple model to formalize this intuition, based on the idea that large exporters have more choices on how to allocate their managerial capacity. This real option makes large exporters wait, as to assign their marginal manager on the best possible project. In contrast, smaller and more focused firms prefer to be pioneers

Impact evaluation of innovation programs in the Chilean services sector

The paper looks at the impact of innovation programs on firms’ performance in the service sector in Chile. Using several measures of innovation outputs and inputs the study assesses the potential heterogeneous impact across industries and firm size. Information from four innovation surveys carried out between 2005 and 2011 indicates that these programs have not been associated with improvements in innovation performance. The findings hold across industries and firm size, including the utilization of alternative methodologies

Gravity and extended gravity: estimating a structural model of export entry

Exporters continuously enter and exit individual foreign markets. Although a given firm's status as an exporter tends to be persistent, the set of destination countries that a firm serves changes frequently. In this paper we empirically examine the determinants of a firm's choice of destination countries and show that their export paths follow systematic patterns. We develop a model of export dynamics where firms decide in each period the countries to which they sell. Our model allows prots from each possible destination country to depend on: (a) how similar it is to the firm's home country (gravity), and (b) how similar it is to other destinations to which the firm has previously exported (extended gravity). Given the enormous number of possible export paths from which firms may choose, conventional estimation approaches based on discrete choice models are unfeasible. Instead, we use a moment inequalities approach. Our inequalities come from applying an analogue of Euler's perturbation method to a discrete choice setting. We show that standard gravity forces have a much larger influence on sunk costs than on fixed costs of exporting and that extended gravity effects can be substantial

Case study analysis for Chile innovation in services (short version)

The study aims to determine the drivers of innovation and productivity in services markets, with special emphasis on the role of public policy. The Chilean cases provide analysis of four major services subsectors: mining services, logistics, retail and Knowledge Intensive Business Services (KIBS). The study includes the application of a taxonomy of innovation. The identification and classification of innovations in each service sector allows patterns to be distinguished in a firm´s strategy of innovation, in terms of their motivations, their restrictions to innovation and the results

Export Mix Changes and Firm Performance: Evidence from Chile

In this paper we analyze changes in the export mix of Chilean firms, looking particularly at differences between large firms and SMEs. To do that, we use detailed information of exported products by firms during the period 1995-2005. Our econometric results, which look at the impact of export product churning on firm performance, are heterogeneous by type of change in export mix and by firm size. In general, export mix changes are associated with improvements on productivity, although our results suggest that this positive effect is only for SMEs. In terms of employment and sales, we find that export product churning has positive effect on large firms and lower - and in some case negative - on SMEs. It seems that changes in export mix are more important for firm growth in large firms, but not in terms of productivity. In contrast, SMEs can have a higher potential for productivity improvement through export product churning but this does not translate necessarily in significant increase in sales and employment.