- Firm's Entry into Foreign Markets: A Network Centrality Analysis (Job market paper, R&R, Journal of Economic Behavior & Organization)
Abstract: This paper examines how an exporting firm's trade partners impact the firm's chances of entering foreign markets. I study both the quantity and quality of trade partners. To quantify quality of a trade partner (country), I use various centrality measures from network analysis to capture the connectivity and importance of each country in the world trade network. High centrality countries are expected to be of "high quality", as they are better connected and thus more important and influential in international trade. Applying the dynamic Probit model to Colombian firm-level export data between 2007 and 2013, I find that firms that export to high centrality countries are significantly more likely to enter foreign markets in the future. Additionally, firms with large networks of trade partners see the most benefit from an increase in network quality.
Abstract: We explore how two separate effects impact an exporting firm's choice of new export destinations. The first effect, Domestic Spillovers, occurs when other domestic firms export a good to a given country. The second, Foreign Networks, refers to links to other countries via a firm's trading partners. Using data from Colombian exporting firms, which we matched with data from their Chilean counterpart importing and exporting firms, from 2007-2016, we show that both effects matter and that they amplify each other. Together, these effects have a greater impact on a firm's choice of new export destinations than geographic proximity measures, import and export growth, and market size combined. We further show that Domestic spillovers are relatively more important than Foreign Networks. This is particularly true for identifying persistent exporters, which export to a new destination for more than a year.
Work in Progress:
- Does Centrality of Importing Countries Affect Export Prices of Colombian Firms?
Abstract: This paper explores whether a Colombian firm's export prices vary with the centrality measures of importing countries. I use indegree centrality and indirect centrality to capture a country's relative position in the world trade network. These two measures characterize how well a country has been supplied and therefore reflect the level of competition in this market. After controlling for the GDP, GDP per capita, physical distance, contiguity, and common language of importing countries, both indegree and indirect centrality measures have statistically significant negative effects on exporting prices. It suggests that the better a destination country is supplied, the lower the export price to that country.