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Empirical Economics

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01-08-2016

To be exporter or not to be exporter? Entry–exit dynamics of Turkish manufacturing firms

Author: Aslihan Atabek Demirhan

Published in: Empirical Economics | Issue 1/2016

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Abstract

Rapidly growing trade literature has highlighted the importance of firm-level analysis. Building on recent empirical results, this paper examines export behaviour of Turkish manufacturing firms for the period of 1989–2010 from survival analysis perspective. This contributes to the existing empirical literature using Turkish data. Moreover, it provides additional new insight about the exporting behaviour of the firms since this is the first and unique application for the Turkish manufacturing sector. Using duration models, we found that export market entry and exit dynamics differ considerably for the Turkish manufacturing firms. Duration to become exporter is found to be shortening with size, productivity, financing and capital intensity. Domestic market profitability, on the other hand, is found to decrease export incentive which is characterized as risk-averse properties of the Turkish firms. Export market survival is found to depend mainly on size, productivity, external financing and quality production. In order to increase export market survival probability and duration, export starters have to invest for increasing their quality competition power.

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Here we do not consider the case in which exporter firm exit and re-enter export markets since single spell is used.

It must be again noted that for the entry case, all of the firms that are used in the analysis subject to left censoring since the exact durations are unknown. All we know is that the observed durations are lower bounds for the actual durations. Within this setting, we can say that duration dependence coefficients will be underestimated. For the robustness check, establishment dates of the firms are considered, and by assuming from birth to the follow-up date, firm did not export. By including those omitted firms, analysis has been reapplied. Robust estimated coefficients are obtained from this analysis. However, due to space limitations, results are not given.

Demirhan-Atabek (2013) concluded that benefits of past export market participation do not depreciate fully immediately after the exit and firms that last exported three years earlier face re-entry costs. In the light of this information, failure event for the survival in export markets is defined as ceasing the exporting activity at least two consecutive years.

See Chaney (2005, 2008) and Manova (2008).

Ten top destination exports constitute more than 60 % of the total exports for each sector and year.

For Canadian establishments, this ratio is approximately 33 % (Sabuhoro and Gervais 2004). For Finnish manufacturing firms, the ratio is 25 % (Ilmakunnas and Nurmi 2010). For Spanish firms, 25 % of the firms that start exporting exit after one year (Esteve-Perez et al. 2006). Cadot et al. (2011) showed that 59 % of the African export starters in 2001 dropped out by 2002.

Learning-by-exporting for Turkish manufacturing firms has been tested by several researchers and supportive evidences for the validity of these hypotheses are obtained (Yasar and Rejesus 2005; Yasar et al. 2007; Aldan and Günay 2008; Maggioni 2012; Kılıçaslan and Erdoğan 2012 and Demirhan-Atabek 2013).

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Title: To be exporter or not to be exporter? Entry–exit dynamics of Turkish manufacturing firms
Author: Aslihan Atabek Demirhan
Publication date: 01-08-2016
Publisher: Springer Berlin Heidelberg
Published in: Empirical Economics / Issue 1/2016
Print ISSN: 0377-7332
Electronic ISSN: 1435-8921
DOI: https://doi.org/10.1007/s00181-015-1005-0

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