Extracci´ on de Reglas de Asociaci´ on a trav´ es del Modelo L´ogico.del Modelo L´ogico

A key economic and policy interest in the globalized world economy is the firms’ pro- cess of internationalization. Research of the past years has resulted in a consensus of explaining export behavior with entry costs and the vast heterogeneity in firm char- acteristics (Bernard and Jensen, 1999; Melitz, 2003; Bernard and Jensen, 2004; Mayer and Ottaviano, 2008). While the most effort was directed at discovering the influence of firm characteristics on export behavior, some have taken the route of investigating the effect of the firms’ immediate environment, the effect of export spillovers. This paper takes this latter route.

Spillovers are the net effect of several agglomeration economies. These can affect the firms directly or indirectly. They have been categorized by Duranton and Puga (2004) as sharing, matching and learning mechanisms. Benefits from sharing arise from indivis- ible goods and facilities that are affordable to larger economic communities only. Also, firms in a more agglomerated environment benefit from the larger variety of inputs and hence more specialized products. Matching allows firms to find the right employment or intermediate inputs and services with a higher probability. Learning facilitates the diffusion of knowledge and information about, e.g., production technologies and mar- ket opportunities. Sharing, matching and learning benefits, however come at a price. Congestion, high rent prices, traffic and commuting can be costly to both workers and employers. These mechanisms are hard to distinguish empirically, primarily due to the lack of precise data. For these reasons this paper investigates the export spillover effect in general, capturing the net of benefit from the aforementioned channels.

Exporting firms can benefit from agglomeration mechanisms in several ways. First, for many exporters sharing such indivisibilities as harbors, airports or other logistics centers is an undoubted benefit. Sharing variety is also key. To successfully compete on foreign markets, production has to meet international quality and scale requirements.

CEU

eTD

Collection

The latter can be substantial based on the size of targeted markets. Agglomeration economies - via input sharing - are able to create sufficient backward linkages to find more suppliers or ones that can provide materials at a larger scale. In addition, the local outsourcing of parts of the production process is more likely in agglomerations. Second, innovation in product quality and services is essential in order to survive the competition on international markets. For example, when explaining the relatively small ratio of Colombian exporters, Brooks (2006) finds that the poor level of product quality plays a crucial role. More recently, Imbriani et al. (2008), investigating the export propensity of Italian firms find that product quality gives a strict ordering to firms in trading activity. Firms in a dense economic environment have a better chance of finding matching - either domestic or foreign - quality input to their production process which makes the firm more productive and enables it to export its own products. Furthermore, dense economies and/or industrially specialized regions provide a better matching labor force in terms of skills and a higher quality of human capital, which increases firm performance. Managers’ past experience with export markets can be

regarded as such human capital. Mion and Opromolla (2011), e.g., highlight that

managers with export experience and skills are better paid and increase the probability of the export entry of Portuguese firms.

Third, exporters also benefit from learning. Learning and knowledge spillovers can bring about information that can significantly reduce the costs of establishing an in- ternational trade relationship. These can be knowledge spillovers on the techniques of trade, administration related, marketing issues, repackagingm or distribution channels. For example, Lovely et al. (2005) investigate the location of exporting firm headquarters in the U.S. They find that the headquarters of firms that export to countries that are more difficult to access tend to locate in each others’ proximity. Also, trade-related tacit knowledge is more likely to circulate better in dense environments. Investigating tacit export knowledge, Soon L. and Fraser (2006) find that information on overseas business opportunities, customer preference and demand fluctuations is valued information for managers.

Recent studies have shown that the presence of other exporting firms in the close vicinity increases the probability of a firm’s trade participation. Investigations take two approaches. The first is after effects on trade entry irrespective of the traded good or destination country. Aitken et al. (1997) examine Mexican manufacturing plants’ export behavior and find that the propensity to trade is positively affected by the presence of multinational firms in the same location only but not traders in general. On Colombian, Mexican and Moroccan data Clerides et al. (1998) find evidence of positive regional externalities. A similar conclusion is drawn by Greenaway and Kneller (2008) for domestic manufacturers in the UK and by Pupato (2007) for Argentine firms. However, spillover effects were found to be not significant in countries such as the US (Bernard and Jensen, 2004) and Ireland (Lawless, 2009, 2010).

CEU

eTD

Collection

et al. (2010) have shown for French firms the presence of positive spillovers from local exporters on trade participation, but not on the intensity of trade. In addition, in a series of papers they uncover heterogeneities in the spillover effects. Focusing on French firms they show that spillovers matter more upon entry into markets that are difficult to trade with (Koenig et al., 2011). Related to this study, two of the authors document the heterogeneity of spillover effects across various export destinations in Asian markets (Mayneris and Poncet, 2011c). The presence of heterogeneous spillovers

has been documented in other countries as well. Dumont et al. (2010) show that

product- and destination-specific spillover effects encourage export participation for Belgian firms. In two papers, Mayneris and Poncet (2011a,b) find spillover effects across Chinese firms.

This paper investigates the existence and scope of local spillovers generated by exporting firms to facilitate the export entry of firms. It asks whether firms are more likely to enter foreign markets when there are more trading firms in their vicinity. To answer these questions, the approach developed by Koenig et al. (2010) is applied to examine the export behavior of Hungarian manufacturers from 1993 to 2003, whose location and trade activity is known at the product and country level.

The contribution of the paper is twofold. First, it examines spillovers on a new, very detailed dataset on firms’ export activity, where location information is available at the municipality level. Second, the paper offers investigations into the heterogeneity of the spillover effect with respect to country and firm characteristics.

Results show a positive effect of local peers on export entry and also that these spillovers are rather specific to destination country and product. I find that spillovers are stronger when peers export the same product. An additional peer exporting to the same country increases entry probability by 0.3 per cent. An additional local peer exporting the same product to the same county increased entry probability by 3.2 per cents. Result suggest that industry specific spillovers, such as sharing or matching play an important role in agglomeration benefits. General knowledge or experience about trade with a destination country has to be specific to the targeted product market.

Examining the heterogeneity of spillovers reveals that spillovers differ significantly with respect to the composition of the peers and the characteristics of the firm who enjoys the benefit. First, with respect to ownership, I find that while foreign-owned firms benefit from peers generally, domestic firms do not appear to benefit from more for- eign peers, only more domestic ones. State-owned firms do not seem to generate any spillover effect. Second, larger firms benefit relatively more from export-agglomerations and also firms in less dense locations, where an additional peer is more valued. Third, the strength of spillover depends inversely on the destination country’s gravity char- acteristics. Spillovers matter more for distant countries and for countries with smaller markets.

The rest of the paper is structured as follows. Next, section 3.2 offers a general empir- ical strategy to model export spillovers. Section 3.3 discusses econometric issues and

CEU

eTD

Collection

threats to identification. Section 3.4 gives a description of the data, the construction of the dataset and the variables, and also looks at the spatial distribution of traders by trading partner country and traded products. Section 4.4 discusses results and offers an examination of spillover heterogeneities and robustness. Finally, section 4.6 concludes.