Supplier dynamics in horticultural export chains: Evidence from Ecuador. Revised Version

In this paper we study the dynamics of smallholder participation in export value chains focusing on the example of small-scale broccoli producers in the highlands of Ecuador. We analyze the extent of participation over an 11-year time period using correlated random effects and diff-GMM models and explain the hazards of dropping out of the export chain based on a multi-spell cox duration model. The empirical results suggest that small-scale farmers' exit from the export sector is accelerated by hold-ups experienced in the past and that family ties play an important role in farmers' marketing decisions. Negative external shocks - such as the global financial crisis starting in 2007 that was associated with the bankruptcy of the main buyer in our case study - represent a major threat towards the sustainability of smallholder inclusion in high-value chains.