Fabrice Defever, Benedikt Heid and Mario Larch
Firm exports exhibit a geographical pattern. Not only do different ﬁrms serve different numbers of countries but also the spatial distribution of those countries differs across ﬁrms. Standard gravity models predict that ﬁrms are more likely to export to larger countries and to countries that are closer to the country of origin of the ﬁrm.
This Nottingham School of Economics working paper, published in the January issue of the Journal of International Economics, quantifies the impact of this spatial pattern using a transaction level customs panel data on the universe of Chinese exporters for the years 2000 to 2006. Fabrice Defever and his co-authors highlight that firms tend serve new markets which are geographically close to their prior export destinations with a higher probability than standard gravity models predict. The paper provide causal evidence of `spatial exporters’ by relying on the removal of binding import quotas under the MultiFiber Arrangement/Agreement on Textiles and Clothing (MFA/ATC) regime in 25 EU countries, the United States, and Canada in 2005. This exogenous shock has generated a large entry of ﬁrms in a set of potential new destinations. The paper quantifies the impact of this spatial pattern using a data set of Chinese ﬁrms which had never exported to the EU, the United States, and Canada before 2005. These countries imposed import quotas on textile and apparel products until 2005 and experienced a subsequent increase in imports of previously constrained Chinese ﬁrms. Fabrice Defever and his co-authors show that the probability to export to a country increases by about two percentage points for each prior export destination which shares a common border with this country.
Forthcoming Journal of International Economics, “Spatial Exporters” by Fabrice Defever, Benedikt Heid and Mario Larch.
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Posted on Wednesday 22nd July 2015