Export markets: substitutes, complements, or independent?

ABSTRACT

Using a large sample of export transactions in Spain over the period 2010–2017, we explore whether firms treat export markets as substitutes, complements, or independent. We find that an exogenous change in revenue in a firm’s top export destination does not change its revenue in other destinations. A firm does not have either a larger probability to increase the number of export destinations when it experiences an exogenous drop in revenue in its top export destination. These results suggest that a shock in firms’ top export market does not affect their decisions in other export markets.

KEYWORDS:

• Exports
• Spain
• manufacturing

JEL CLASSIFICATION:

• F10
• F14

Acknowledgments

We thank the Department of Customs and Excise of the Spanish Tax Agency (AEAT) for providing Customs data.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Berman, Berthou, and Héricourt (2015), who found a positive correlation, is the exception.

² Exports and imports are deflated using the Index of export prices and the Index of import prices, respectively (base year 2015). Production is deflated using the Index of industrial prices (base year 2015). Wages are deflated using the Consumer price index (base year 2016).

³ The first-stage F-statistic of 114.89 allows us to reject the null hypothesis of weak instruments.

Additional information

Funding

We gratefully acknowledge financial support from the Spanish Ministry of Science, Innovation and Universities (RTI2018-100899-B-I00, co-financed with FEDER), and the Basque Government Department of Education, Language policy and Culture (IT885-16).