DP2560 Exports and Information Spillovers

Author(s): Marcelo Olarreaga

Publication Date: September 2000

Keyword(s): Export , Information Spillovers , Developing Countries

JEL(s): F10 , F13 , F14

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP2560.asp

Exporters’ performance in a particular market may affect their future exports to the rest of the world. Importers may base their future transaction decisions upon the information revealed by exporters’ past performance in other countries. Similarly, exporters acquire valuable information on foreign consumer tastes, product standards or customs administration that may profitably be used in future transactions with other countries. This paper estimates the large effects of these information spillovers across markets on the export patterns of four developing countries (Egypt, Korea, Malaysia and Tunisia). A dollar increase in exports to the United States generates on average an extra 2 to 14 cents of exports to the rest of the world in the next period. Social and ethnic networks seem to reinforce these information spillovers, especially in developing countries, where they appear to be geographically more concentrated. The exception is China and to some extent Hong Kong, probably reflecting a geographically more diversified migration pattern.