This article analyses the role of economic diplomacy on the export market entry decisions of Dutch firms. We show that the presence of government support offices in middle-income countries and government trade missions stimulate Dutch firms to enter export markets in these countries. These conclusions follow from using detailed international trade data combined with firm and export market characteristics.

This paper utilizes new Dutch transaction-level data on international trade to investigate the microeconomic patterns of Dutch exports. First, we show that self-selection based on ex-ante productivity drives firms' export decisions, which we subsequently relate to various sources of fixed market-entry costs: governance and regulatory quality, the extent of corruption, and cultural proximity. Second, we provide evidence that firms learn to export by trial and error, so as to obtain experience in exporting and to gather knowledge about the potential of foreign markets. Such experimentation appears to be reflected in the volatility of a firm's export product portfolio. More volatility is associated with a higher survival rate in the export market. Finally, we draw conclusions on the potential implications for trade policy.

This article analyses the developments of competition between 1993 and 2001 at the industry level. Using the relative profits measure and the price-cost margin based on firm-level data, these competition indicators suggest that competition did not increase in most industries but diverged widely. This is puzzling in light of the regulatory reforms to enhance competition. An econometric analysis suggests that regulatory reforms indeed intensified competition, but also that considerable growth of market demand may have weakened competition. Finally, the two indicators often point in the opposite direction for the development of competition, because they respond differently to a reallocation of output from inefficient to efficient firms.

This paper analyses firms' export entry decisions and their subsequent expansion to other export markets using Dutch firm-level international transaction data. In particular new exporters increase quickly the distance between their export markets and their home country. They are also going to export to countries in which the institutional and regulatory quality is lower. We show that firms follow a stepping stone approach for learning to export and to enter distant markets. The probability to enter a market at 1,000 km from the Netherlands increases by about 25% if the firm already exports to a market at 500 km from the new one.