Do foreign contacts enable firms to become exporters?.

Content Provider	CiteSeerX
Author	Sjöholm, Fredrik Jel, F.
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. I. INTRODUCTION * The pattern of trade between nations is well understood. Factor endowments, technology, market size, transport costs, and consumer preferences determine a country's export and import. Less is understood about which firms will conduct the export. Typically, many firms
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