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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 326:
Do Foreign Contacts Enable Firms to Become Exporters?

Fredrik Sjöholm ()

Abstract: The pattern of trade between nations is well understood, but much less is known about firm level determinants to export: why do some firms start to export while others continue to produce for the domestic market? One reason for different firm strategies could be that the fixed costs for export differs between firms. This paper examines if foreign contacts decrease export-costs and thereby have a positive impact on the export propensity. More specifically, are establishments which have large degrees of foreign contacts relatively likely to become exporters? Three different types of foreign contacts are examined: foreign ownership, import, and regional presence of Foreign Direct Investment. The study is conducted using Indonesian establishment data covering all manufacturing establishments with more than 20 employees.

Keywords: Export; sunk costs; foreign contacts; establishment data; Indonesia; (follow links to similar papers)

JEL-Codes: F10; F23; L10; (follow links to similar papers)

26 pages, June 22, 1999

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This paper is published as:
Sjöholm, Fredrik, (2003), 'Which Indonesian Firms Exports? The Importance of Foreign Networks', Papers in Regional Science, Vol. 82, pages 333-350

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