Trade Adjustment Costs in Developing Countries: - World Bank ...

280Tibor Besedeš and Thomas J. Prusaand Requena (2008) examine duration of exports of regions of Spain finding themedian duration for all regions to be just one year and probability of survival rapidlydecreasing. Volpe and Carballo (2008) examine export survival of newly exportingPeruvian firms and find their median export duration to be just one year.They also examine the impact geographical and product diversification play forsurvival and conclude geographical diversification is more important. Görg, et al.(2008) use data on exports of Hungarian firms at the 6–digit HS product level andfind that the median duration is between two and three years. In slight contrastto Besedeš and Prusa (2006a; 2006b), Nitsch (2009), and Volpe and Carballo(2008) who all find the hazard to be highest in the first year, Görg, et al.(2008)find the hazard of exporting initially increases and reaches its maximumbetween the third and fourth year, after which it decreases rapidly.Using the same data as Görg, et al. (2008), Muraközy and Bekes (2008) examinedifferences between permanent and temporary trade, where temporary tradeis defined as any trade relationship with duration under three years. They findthat while the long-term survival rates for US and Hungarian trade relationshipsare similar, short-term survival rates are not. They offer a new explanation fortemporary trade and short-lived relationships. Unlike Rauch and Watson (2003)and Besedeš (2008), where short duration is a consequence of uncertainty and‘testing the waters’, Muraközy and Bekes find one-fifth of temporary trade to bethe consequence of one-time asset and inventory sales. Caron and Anson (2008)examine duration of low-valued Brazilian exports. These are exports under$20,000 which can be exported using simplified export regulations availablethrough many post offices in Brazil. Most of these exports are of short durationwith the median of just one year. Fabling and Sanderson (2008) study durationof New Zealand’s exports at the 5–digit SITC and 10–digit HS product level as wellat the firm and firm-product level. They too find export duration to be short withmedian duration at one or two years across various levels of aggregation. Theyfind duration at the firm level to be slightly longer than at the product level,which is likely due to firms changing the mix of products they export. Cadot, Iacovone,Rauch, and Pierola (2010) study the first year survival of exporters atthe firm-product level from Malawi, Mali, Senegal, and Tanzania and find lowsurvival rates. Survival improves as firms build experience both with the productthey export as well as the destination where they export. In addition, agglomerationhas a positive effect on survival – the more firms export the sameproduct to the same destination, the higher the survival for every firm.Eaton et al. (2008) use Columbian firm-level data to examine export dynamics.While they do not estimate a duration model, they find that about half ofColumbian firms exporting in any year tend to be new exporters who export lowvolumes and most of whom do not survive the first year. Álvarez and Fuentes(2009) find qualitatively similar results for exports of Chilean firm recorded at the8-digit HS level between 1991 and 2001, while Lederman, Clare, and Xu (2010)find that over 40 percent of new export activities on the part of Costa Rican firmsbetween 1997 and 2007 do not survive the first year, and argue that low survivalis one of the main impediments to higher export growth.