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

Rodrigo Wagner, Andrés Zahler

Research output: Contribution to journalArticlepeer-review

17 Scopus citations

Abstract

We study the micro dynamics of new exports from a country. The modern international trade workhorse models (e.g. Melitz, 2003) assume heterogeneous productivity and, implicitly, predict that the ex-post largest exporters in a new product would be the pioneers, since they can pay back exploration costs. However, using detailed data on the early dynamics of new exports in Chile (1990-2007) we show that, on average, pioneers export less than comparable followers in the same new product. Moreover, followers are 40% more likely to enter a product if a pioneer survives more than one year exporting. These facts are consistent with pioneer-to-follower spillovers, or at least with stories in which the cost of entering early is disproportionally higher for larger exporters. Otherwise they would enter first. Firms better at "exploration" could be worse at "exploitation" (scale-up) in a new export product. This phenomenon is scarce, though, since in most new products pioneers are not followed, even if they survive.

Original languageEnglish
Pages (from-to)203-223
Number of pages21
JournalJournal of Development Economics
Volume114
DOIs
StatePublished - 1 May 2015
Externally publishedYes

Keywords

  • Economic growth
  • Export diversification
  • Heterogeneous entry costs
  • Self-discovery

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