THE DURATION OF FIRM-DESTINATION EXPORT RELATIONSHIPS: EVIDENCE FROM SPAIN, 1997–2006

Authors

  • SILVIANO ESTEVE-PÉREZ,

    1. Esteve-Pérez: Department of Applied Economics II, Universidad de Valencia, Avda. de los Naranjos s/n, 46022 Valencia, Spain. Phone 34 963828852, Fax 34 963828354, E-mail sesteve@uv.es
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  • FRANCISCO REQUENA-SILVENTE,

    1. Requena-Silvente: Department of Applied Economics II, Universidad de Valencia, Avda. de los Naranjos s/n, 46022 Valencia, Spain. Phone 34 963828851, Fax 34 963828354, E-mail francisco.requena@uv.es
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  • VICENTE J. PALLARDÓ-LOPEZ

    1. Pallardó-Lopez: Department of Applied Economics II, Universidad de Valencia, Avda. de los Naranjos s/n, 46022 Valencia, Spain. Phone 34 963828341, Fax 34 963828354, E-mail vicente.pallardo@uv.es
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    • We thank comments from two referees and participants in the ETSG 2009 Conference. Esteve-Pérez and Requena-Silvente acknowledge financial support from the Spanish Ministry of Science and Innovation (reference ECO2011-27619/ECON) and Generalitat Valenciana (GV PROMETEO2009-098). Requena-Silvente also acknowledges the Jose Castillejo Scholarship, which sponsored his stay at the University of California, Davis, during the academic year 2008–2009.


Abstract

This article uses survival analysis to investigate the duration of Spanish firms' trade relationships by destination over 1997–2006. Whereas firm export status is highly persistent, firms' destination portfolio is very dynamic: a typical firm-country exporting relationship has a median duration of 2 years. Yet, if a firm manages to export to a country beyond 2 years the risk of exiting that market sharply falls afterwards. The results indicate that not only firm heterogeneity but also destination heterogeneity are crucial to explain survival in export markets. In particular, country (political) risk heavily shapes the effect of firm, product, and other destination characteristics on the length of trade relationships. Whereas firm productivity, comparative advantage, partners' GDP, and proximity enhance duration of trade with low-risk countries, they have no effect on trade survival with high-risk countries. On the contrary, information spillovers are particularly relevant to enhance survival of trade relationships with high-risk countries. (JEL C41, F10, F14)

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