The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

We apply a Heckman selection model to the 2003-Investment Climate Survey (ICS) to investigate supply-side constraints to export performance at the firm level in Ecuador. To correct for the non-random truncation problem, we use the Heckman selection model to estimate the probability of exporting (export propensity) and the share of total sales that are exported (export intensity) by Ecuadorian firms. A baseline model with 12 independent variables divided into three categories -idiosyncratic characteristics, technology, and business environment -is developed. Three other models are developed with the addition of variables related to trade integration, business environment, and infrastructure. Results corroborate with the hypothesis implicit in the Heckman model, which considers both decisions made by a firm -whether to export, and how much of its sales to export -to be interdependent. In the Ecuadorian case, three important results for the firm's export performance are found: technology matters; infrastructure does not; and trade orientation is significant, with specialized firms tending to have smaller export intensity when having the countries of the Andean Community as their main trade partners, the opposite happening if the U.S. is their main trade partner. We find a robust and stable relationship for export propensity and intensity with size, import of inputs, labor regulations, in-house R&D, quality certification, web-use, and foreign ownership. Also, capacity utilization and trade with the U.S. positively affect export intensity, while trade within the Andean Community has the opposite effect in our outcome variable. No significant relationship was found for the infrastructure variables.

What enables Ecuadorian manufacturing firms to start exporting? And what are the determinants of the share of total sales exported by a firm, once the decision of becoming an exporter has been made? We apply a Heckman selection model to the Ecuador's Investment Climate Survey (ICS) to investigate supply-side constraints to export performance at the firm level. We estimate export propensity (the probability of exporting) and export intensity (the share of total sales that are exported). The application of the Heckman selection model to a rich dataset as the ICS is a major contribution as previous applications of the Heckman selection model used much limited datasets, limiting the range of hypotheses to be tested. Furthermore, other studies on export performance based on ICS data use either Tobit or Probit models, incurring important methodological limitations. We find robust and stable relationships for export propensity and intensity with firm size, import of inputs, labor regulations, in-house R&D, quality certification, Web use, and foreign ownership. Capacity utilization and trade with the US positively affect export intensity, while trade within the Andean Community has the opposite effect in our outcome variable. No significant relationship was found with the infrastructure variables.