Exporter Dynamics, Firm Size and Growth, and Partial Year Effects
Two otherwise identical firms that enter the same market in different months, one in January and one in December, will report dramatically different annual sales for the first calendar year of operations. This partial year effect in annual data lea...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2013/11/18554162/exporter-dynamics-firm-size-growth-partial-year-effects http://hdl.handle.net/10986/16902 |
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okr-10986-169022021-04-23T14:03:33Z Exporter Dynamics, Firm Size and Growth, and Partial Year Effects Bernard, Andrew B. Massari, Renzo Reyes, Jose-Daniel Taglioni, Daria ACCESS TO FOREIGN MARKETS ADVERSE SHOCKS ANNUAL GROWTH ANNUAL GROWTH RATE AVERAGE ANNUAL GROWTH AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE LEVEL BANK POLICY CONSTANT RATE DATA SETS DEVELOPMENT POLICY DOMESTIC MARKET DUMMY VARIABLES ECONOMIC LITERATURE ECONOMIC POLICY ECONOMICS EMPIRICAL LITERATURE EMPIRICAL MODEL EMPIRICAL REGULARITIES EMPIRICAL RESULTS EMPIRICAL WORK EMPLOYMENT ENTREPRENEURS EXPORT GROWTH EXPORT MARKET EXPORT MARKETS EXPORTER EXPORTERS FIRM PERFORMANCE FIRM SIZE FIRM SIZES FIRMS FIRST YEAR FIXED EFFECTS FOREIGN MARKET FOREIGN MARKETS GLOBAL ECONOMY GROWTH PATTERN GROWTH RATES HIGH ENTRY HIGH GROWTH INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE MARKET ENTRY MARKET PARTICIPANTS MICRO-DATA OUTPUT GROWTH POLICY RESEARCH POLITICAL ECONOMY POVERTY REDUCTION RAPID GROWTH SALES SMALL FIRMS STANDARD DEVIATION TOTAL OUTPUT TOTAL SALES TRANSACTION Two otherwise identical firms that enter the same market in different months, one in January and one in December, will report dramatically different annual sales for the first calendar year of operations. This partial year effect in annual data leads to downward biased observations of the level of activity upon entry and upward biased growth rates between the year of entry and the following year. This paper examines the implications of partial year effects using Peruvian export data. The partial year bias is very large: the average level of first-year exports of new exporters is understated by 65 percent and the average growth rate between the first and second year of exporting is overstated by 112 percentage points. This paper re-examines a number of stylized facts about firm size and growth that have motivated rapidly expanding theoretical and empirical literatures on firm export dynamics. Correcting the partial year effect eliminates unusually high growth rates in the first year of exporting, raises initial export levels, and shifts 10 percent of market entrants from below to above the median size. Revisiting an older set of facts on firm size and growth, the paper finds that correcting for partial year biases reduces the number of small firms in the firm size distribution and weakens the negative relationship between firm growth and firm size. 2014-02-04T22:18:24Z 2014-02-04T22:18:24Z 2013-11 http://documents.worldbank.org/curated/en/2013/11/18554162/exporter-dynamics-firm-size-growth-partial-year-effects http://hdl.handle.net/10986/16902 English en_US Policy Research Working Paper;No. 6711 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO FOREIGN MARKETS ADVERSE SHOCKS ANNUAL GROWTH ANNUAL GROWTH RATE AVERAGE ANNUAL GROWTH AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE LEVEL BANK POLICY CONSTANT RATE DATA SETS DEVELOPMENT POLICY DOMESTIC MARKET DUMMY VARIABLES ECONOMIC LITERATURE ECONOMIC POLICY ECONOMICS EMPIRICAL LITERATURE EMPIRICAL MODEL EMPIRICAL REGULARITIES EMPIRICAL RESULTS EMPIRICAL WORK EMPLOYMENT ENTREPRENEURS EXPORT GROWTH EXPORT MARKET EXPORT MARKETS EXPORTER EXPORTERS FIRM PERFORMANCE FIRM SIZE FIRM SIZES FIRMS FIRST YEAR FIXED EFFECTS FOREIGN MARKET FOREIGN MARKETS GLOBAL ECONOMY GROWTH PATTERN GROWTH RATES HIGH ENTRY HIGH GROWTH INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE MARKET ENTRY MARKET PARTICIPANTS MICRO-DATA OUTPUT GROWTH POLICY RESEARCH POLITICAL ECONOMY POVERTY REDUCTION RAPID GROWTH SALES SMALL FIRMS STANDARD DEVIATION TOTAL OUTPUT TOTAL SALES TRANSACTION |
| spellingShingle |
ACCESS TO FOREIGN MARKETS ADVERSE SHOCKS ANNUAL GROWTH ANNUAL GROWTH RATE AVERAGE ANNUAL GROWTH AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE LEVEL BANK POLICY CONSTANT RATE DATA SETS DEVELOPMENT POLICY DOMESTIC MARKET DUMMY VARIABLES ECONOMIC LITERATURE ECONOMIC POLICY ECONOMICS EMPIRICAL LITERATURE EMPIRICAL MODEL EMPIRICAL REGULARITIES EMPIRICAL RESULTS EMPIRICAL WORK EMPLOYMENT ENTREPRENEURS EXPORT GROWTH EXPORT MARKET EXPORT MARKETS EXPORTER EXPORTERS FIRM PERFORMANCE FIRM SIZE FIRM SIZES FIRMS FIRST YEAR FIXED EFFECTS FOREIGN MARKET FOREIGN MARKETS GLOBAL ECONOMY GROWTH PATTERN GROWTH RATES HIGH ENTRY HIGH GROWTH INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE MARKET ENTRY MARKET PARTICIPANTS MICRO-DATA OUTPUT GROWTH POLICY RESEARCH POLITICAL ECONOMY POVERTY REDUCTION RAPID GROWTH SALES SMALL FIRMS STANDARD DEVIATION TOTAL OUTPUT TOTAL SALES TRANSACTION Bernard, Andrew B. Massari, Renzo Reyes, Jose-Daniel Taglioni, Daria Exporter Dynamics, Firm Size and Growth, and Partial Year Effects |
| relation |
Policy Research Working Paper;No. 6711 |
| description |
Two otherwise identical firms that enter
the same market in different months, one in January and one
in December, will report dramatically different annual sales
for the first calendar year of operations. This partial year
effect in annual data leads to downward biased observations
of the level of activity upon entry and upward biased growth
rates between the year of entry and the following year. This
paper examines the implications of partial year effects
using Peruvian export data. The partial year bias is very
large: the average level of first-year exports of new
exporters is understated by 65 percent and the average
growth rate between the first and second year of exporting
is overstated by 112 percentage points. This paper
re-examines a number of stylized facts about firm size and
growth that have motivated rapidly expanding theoretical and
empirical literatures on firm export dynamics. Correcting
the partial year effect eliminates unusually high growth
rates in the first year of exporting, raises initial export
levels, and shifts 10 percent of market entrants from below
to above the median size. Revisiting an older set of facts
on firm size and growth, the paper finds that correcting for
partial year biases reduces the number of small firms in the
firm size distribution and weakens the negative relationship
between firm growth and firm size. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Bernard, Andrew B. Massari, Renzo Reyes, Jose-Daniel Taglioni, Daria |
| author_facet |
Bernard, Andrew B. Massari, Renzo Reyes, Jose-Daniel Taglioni, Daria |
| author_sort |
Bernard, Andrew B. |
| title |
Exporter Dynamics, Firm Size and Growth, and Partial Year Effects |
| title_short |
Exporter Dynamics, Firm Size and Growth, and Partial Year Effects |
| title_full |
Exporter Dynamics, Firm Size and Growth, and Partial Year Effects |
| title_fullStr |
Exporter Dynamics, Firm Size and Growth, and Partial Year Effects |
| title_full_unstemmed |
Exporter Dynamics, Firm Size and Growth, and Partial Year Effects |
| title_sort |
exporter dynamics, firm size and growth, and partial year effects |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2013/11/18554162/exporter-dynamics-firm-size-growth-partial-year-effects http://hdl.handle.net/10986/16902 |
| _version_ |
1764434945461190656 |