The dynamic linkages between exporting and importing in Colombian manufacturing

Abstract

This paper analyses the dynamic linkages between firms’ imports of intermediate inputs and exports, for Colombia, an emerging economy. We use data for manufacturing firms from the Colombian Annual Manufacturing Survey, for the period 2007-2016. We specially focus on the identification of direct and indirect effects of past importing/exporting experience on the likelihood of exporting and importing intermediates. We understand by indirect effects those that accrue from past experience (in exporting and importing intermediates) on the probability of exporting/importing intermediates, through enhanced productivity. Further, we analyse both own-direct effects of exporting (importing) and cross-direct effects of exporting (importing) on importing (exporting). Finally, we identify and quantify the role of sunk costs and learning in explaining exporting and importing persistence. The estimation results suggest the relevance of both direct and indirect effects (own and cross) to explain firms’ exports and imports of intermediates decisions.