Playing the lottery or dressing up? A model of firm-level heterogeneity and the decision to export

Crescimento com Base nas Exportações depois da COVID-19

“…Thus, competition in foreign markets could give rise to export firm productivity improving. Naudé et al (2015) provide a theoretical model wherein the presence of fixed trade costs gives exporting a similar decision -making structure as investment, and that as such the timing of when to export will matter. Thus, it is-not only the firm's productivity, but whether or not rates of return from entering the export market at a particular point in time will be considered.…”

“…This may mean that even productive firms may postpone entry into export markets if they face high uncertainty -which is the case in the current global pandemic. Thus, in the Naudé et al (2015) model, the kind of systemic uncertainty implied by the COVID -19 pandemic will reduce export growth at the extensive margin due to this postponement effect of investment under uncertainty.…”

“…Trade facilitation can also, implicitly through many of the above -mentioned measures, or explicitly, e.g., through providing export subsidies, try to reduce some of the uncertainty and risk attached to exporting. An important result from the literature is that exporting is akin to an investment decision under uncertainty (Naudé and Gries, 2015), and that when foreign demand uncertainty is reduced, that exports will increase predominantly through the extensive margin (De Sousa et al, 2020). Hence, uncertainty reduction is a valuable objective to facilitate the entry of more firms into exporting.…”

Export-Led Growth after Covid-19: The Case of Portugal

“…through providing export subsidies, try to reduce some of the uncertainty and risk attached to exporting. An important result from the literature is that exporting is akin to an investment decision under uncertainty (Naudé et al, 2015), and that when foreign demand uncertainty is reduced, that exports will increase predominantly through the extensive margin (Sousa et al, 2020). Hence, uncertainty reduction is a valuable objective to facilitate the entry of more firms into exporting.…”

“…The first filter (Filter 1) takes into account the potential of various external markets as reflected by its economic size, growth, and political and commercial risk. These are key determinants of exports, as was discussed in section 3.2 where key literature cited include Anderson and van Wincoop (2004); Krugman (1979Krugman ( , 1980; Naudé et al (2015) and Sousa et al (2020)). Key variables used in this filter include GDP and GDP per capita and annual growth rates of these variables, as well as country risk ratings.…”