Import Uncertainty and Export Dynamics
A supply chain is only as strong as its weakest link. Firms are constantly managing uncertainties, including unexpected delays in the provision of a critical input that can slow down or halt the production process, possibly making the manufacturer miss a delivery deadline. As most exporters are also importers of intermediate goods, supply chain unreliability related to import processing times at the border could impact downstream export dynamics. The role of unpredictability in border-clearance times for imports in manufacturing firms’ entry, exit, and survival in export markets is investigated using the PPML estimator on a rich dataset built on firm level information for 48 developing countries over 2006–2014. Uncertainty in the time to clear imported inputs impacts neither the entry nor the exit rate, but translates into lower survival rates for new exporters, reducing the number of firms that continue serving the foreign market beyond their first year of entry. This effect grows larger over time, owing to rising reputational costs to input-importing exporters and is mainly driven by South-North trade, possibly reflecting the time-sensitivity of buyers in developed countries. Results also reveal heterogeneous effects across export industries, and the mediating role of sunk costs of entry in foreign markets, which attenuate the negative effect of uncertainty on survival rates as firms delay exiting the export market.
| Main Authors: | , , |
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| Format: | Journal Article biblioteca |
| Language: | English en_US |
| Published: |
Published by Oxford University Press on behalf of the World Bank
2023-12-18
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| Subjects: | EXPORT DYNAMICS, IMPORT UNCERTAINTY, SUPPLY CHAIN UNRELIABILITY, CUSTOMS, TRADE COSTS, FIRMS, |
| Online Access: | http://documents.worldbank.org/curated/en/099157402022412162/IDU1427e1d101b4c214dda194aa1a33be14e3b93 https://hdl.handle.net/10986/41343 |
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