New exports from emerging markets: Do followers benefit from pioneers

2015. Journal of Development Economics. Vol. 114, Pp 203 – 223

Andres Zahler, Rodrigo Wagner B

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 largest exporters in a new product would be the pioneers, since they can more easily 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 exporting. These facts seem 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 product. This phenomenon is scarce, though, since in most new products pioneers are not followed, even if they survive. 

Palabras claves: Economic growth, export diversification, self-discovery, heterogeneous entry costs.

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