The survival of Latvian products and firms in export markets
This paper investigates factors that contribute to the survival of export relationships
at the firm and product levels using a large anonymised firm-level database for Latvia.
It finds that some characteristics of exporting firms, such as a higher productivity
level, larger size, lower indebtedness and higher profitability are associated with
longer duration of export relationships. Firms that innovated prior to exporting are
also likely to enjoy longer export spells, while participation in an EU-fund support
programme did not alter duration. Younger staff and management of the firm are associated
with a better survival of a new export product. Furthermore, this paper reveals novel
roles of export product characteristics in survival, in particular an interesting
tension between the complexity of new export products and their “distance” from the
existing export bundle. While aiming high, that is, exporting products that are more
complex, pays off as such products are associated with longer-lasting trade relationships,
aiming too high, that is exporting new products that are far more complex than the
exporter’s existing product bundle, tends to lower their survival probability.
Published on April 22, 2022
In series:OECD Economics Department Working Papersview more titles