Spatial Exporter Dynamics

Using Chinese customs data for estimating a discrete choice model between potential export destinations, we present evidence for sequential export investment decisions of exporters driven by search and learning processes in foreign markets. Using a fixed effects conditional logit model, we account for the possible multiplicity of new export destinations of firms. In addition, we endogenize the number of new export destinations which increases with firm productivity. Our findings hint at a positive correlation in unobserved firm profits across neighboring countries. This gives empirical support for theoretical models of exporter dynamics in the vein of Eaton et al. (2009) and Albornoz et al. (2009).