The role of extensive and intensive margins and export growth

Tibor Besedeš, Thomas J. Prusa

Research output: Contribution to journalArticlepeer-review

133 Scopus citations

Abstract

We investigate and compare countries' export growth based on their performance at the extensive and intensive export margins. Our empirical approach is motivated by an extension to the Melitz (2003) model of heterogeneous firms in which exporters are subject to a one-time sunk cost and also a per-period fixed cost. With imperfect information a firm may enter export markets but shortly exit when it learns its per-period fixed costs. We apply this insight to disaggregated export data and confirm that indeed most export relationships are very short lived. We then show that the survival issue is a significant factor in explaining differences in long run export performance. We find that developing countries would experience significantly higher export growth if they were able to improve their performance with respect to the two key components of the intensive margin: survival and deepening.

Original languageEnglish (US)
Pages (from-to)371-379
Number of pages9
JournalJournal of Development Economics
Volume96
Issue number2
DOIs
StatePublished - Nov 2011

All Science Journal Classification (ASJC) codes

  • Development
  • Economics and Econometrics

Keywords

  • Export survival
  • Extensive margin
  • Intensive margin

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