Sequential exporting with carry-along trade products: evidence from Turkey

Sertkaya, Sevi (2017) Sequential exporting with carry-along trade products: evidence from Turkey. Masters thesis (MPhil), University of Sussex.

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Abstract

International trade literature rationalizes that inexperienced firms mostly start exporting
with small shipments to a neighboring country to discover their own capabilities. This
strategy is called sequential exporting and is observed in different countries and with
different products.
On the other hand, recent evidence shows that manufacturing firms do not actually
produce all of their exports. Carry-along Trade (CAT) refers to the exports of
manufacturing firms that are not produced by themselves. CAT exports turn out to be
relevant in terms of intensive and extensive margins of firms’ aggregate exports.
The aim of the thesis is to combine these two different strands of literature by using the
theoretical and empirical characteristics of CAT (not self-produced), and MAN (selfproduced)
products.
In the theoretical framework, MAN products have high sunk costs and low marginal costs,
whereas CAT products have higher marginal costs and lower sunk costs. The sequential
exporting model of Albornoz et al., (2012) is adjusted slightly to allow for different CAT
and MAN cost structures and new predictions are derived.
In the empirical section, these predictions are tested by exploiting matched firm-level
Turkish Foreign Trade, Production, and Structural Business Statistics datasets for the
period 2005-2011. New exporters which survive to export in the second year are classified
into two groups: sequential exporters that experiment in only one market and
simultaneous exporters that experiment in at least two markets. The results show that both
sequential and simultaneous exporters tend to use CAT exports for experimentation and
for expanding their market coverage. For second-year expansion in their first-markets,
simultaneous exporters’ use CAT and MAN products roughly equally while sequential
exporters derive their export growth largely from CAT products. Operating in non-credit
constrained sectors accentuates the previous findings of first year-first market export
growth and the probability of second-year entry to new markets. Findings of first yearfirst
market export growth are intact for added specifications of productivity and foreign
ownership. However, no inferences can be drawn for the probability of entering new
markets in the second-year of exporting.

Item Type: Thesis (Masters)
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences > HD Industries. Land use. Labour > HD9000 Special industries and trades > HD9720 Manufacturing industries
H Social Sciences > HF Commerce > HF1414.4 Exports
Depositing User: Library Cataloguing
Date Deposited: 04 Oct 2017 12:34
Last Modified: 04 Oct 2017 12:34
URI: http://sro.sussex.ac.uk/id/eprint/70404

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