Residual exports and domestic demand: an empirical analysis

This paper analyzes and quantifies the impact on domestic sales of being an exporter. It is widely assumed that exporters sell in domestic market more than non-exporters, among other important features. However, export participation also slows the growth rates of domestic sales. We will refer to this fall in domestic sales growth as residual export. The empirical analysis uses Spanish microdata provided by the Encuesta Sobre Estrategias Empresariales (ESEE) for the period 1990-2011 in a difference-in-difference model. This method compares domestic sales before and after entry in exporting for two time periods and for two groups of firms: exporters and non-exporters. The results confirm that participation in export activities slows down domestic sales growth significantly, although the amount of this result varies when we distinguish between different types of firms according to their persistence as exporter.