Financial vulnerability and export dynamics

This paper examines the implication of financial shocks on firms’ export dynamics in developing economies. To address this question, we use the Exporter Dynamics Dataset, which contains new data on the microstructure of exports for 34 developing countries between 1997 and 2011, and investigate how e...

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Bibliographic Details
Published in:World economy 2018-06, Vol.41 (6), p.1640-1663
Main Authors: Jaud, Melise, Kiendrebeogo, Youssouf, Véganzonès‐Varoudakis, Marie‐Ange
Format: Article
Language:English
Subjects:
Capital
Destinations
Developing countries
Economic analysis
Economic crisis
Economic impact
Economic models
Economics and Finance
export dynamics
Exports
Finance
financial crises
financial vulnerability
Humanities and Social Sciences
LDCs
Markets
Vulnerability
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Summary:This paper examines the implication of financial shocks on firms’ export dynamics in developing economies. To address this question, we use the Exporter Dynamics Dataset, which contains new data on the microstructure of exports for 34 developing countries between 1997 and 2011, and investigate how exporter behaviour is affected by financial crises. We find that financial crises in both the origin and destination countries have a large negative effect on firm, product and destination dynamics, particularly in industries dependent on external finance. Financial crises make the costs of exporting more difficult to meet and in turn reduce firms’ ability to start exporting, introduce new products and sell to new destinations. We also find that the impact of financial crises is less pronounced in exporting countries with relatively more open capital accounts, suggesting that portfolio inflows may be a good substitute for underdeveloped domestic financial markets.
ISSN:0378-5920
1467-9701
DOI:10.1111/twec.12596