History Matters for the Export Decision: Plant Level Evidence from Turkish Manufacturing Industry
34 Pages Posted: 29 Sep 2008
Date Written: September 28, 2008
We analyze the export decision of the Turkish manufacturing plants from 1990 to 2001. In addition to the presence of high sunk costs of entry in export markets, we find support for the hypothesis that the full history of exporting matters for the current export decision. However, the effect of the past export experience on current export decision depreciates rapidly with time: Recent export market participation matters more than the participation further in the past. Finally, while persistence in exporting helps lower the costs of re-entry today, there are diminishing returns to export experience. The results are robust to several plant characteristics (plant size, technology, composition of the employment), and the spillovers from the presence of exporters in the same industry.
Keywords: Export decision, sunk costs, productivity, dynamic panel data, Turkey
JEL Classification: F14, D21
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