Research Papers

Change, Yes They Can!

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This paper explores the switching and co-exporting of products exported by Philippine manufacturing firms. The product switching of firms and co-exporting of products within firms is employed to analyze changes in the (initial) skill set of exporting firms over time. In line with the “Core competency” theoretical literature, initially developed by Eckel and Neary (2010), the skill set of a firm is assumed to be revealed by the main export product in terms of yearly export revenue. Also, in line with Bernard et al. (2010), the adding and dropping of products to the existing product range is analyzed. For this paper a new and rich firm-level data base is used, which matches the firm-coded trade transactions data (7-digit) of Philippine manufacturing firms, with their corresponding firm survey data from 1991-2012. The new empirical stylized fact that main export product switches are frequent is found, thereby hinting on possible frequent changes in the skill sets of firms over time. Using co-exporting of products by the same firm in a certain year similarities between products are identified. Products more frequently co-exported are seen as more similar. The switching behavior of Philippine manufacturers depends, among other factors, on exporter age, size and the overall similarity of the product exported. Also younger/smaller firms are more likely to switch and when they switch make more unrelated switches, while the reverse is true for older/larger firms. Younger/smaller firms display behavior that seems more indicative of an experimentation/exploration process when exporting.


Firm Export Survival: Micro-Evidence from the Philippines

(with Jean-Marie Viaene and Annette Pelkmans-Balaoing)

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This paper explores firms’ export dynamics in emerging economies where local firms face stiff foreign competition, both at home and abroad, and thus compelled to choose the level of quality in which to export. A model of vertical product differentiation is developed and tested where the link between export performance and product quality is central. The impact of other governmental decisions related to multiple uncertainties faced by exporters such as exchange rate, freight and trade policies, are investigated as well. Using discrete survival analysis, this paper shows that export spells have a notable short duration, 20 months on average. Particularly 72.2% of trade relationships in year one do not survive to year two. Market uncertainties, particularly those linked to exchange rates and transport costs increase the probability of firm exit as expected. Export survival rates are highest among firms that select an export price contained in the interval between the median and mean of the international distribution of product prices. In contrast, those choosing a price located at both ends of this distribution have the least chance of survival.


Export Prices Across Firms and Destination: Manova and Zhang Revisited

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This paper revisits 4 stylized facts of export prices found in Manova and Zhang (2012). This exploratory paper replicates part of the analysis of Manova and Zhang (2012) for the Philippines. Finding, among other stylized facts, that firms vary prices over destinations and that higher revenues are correlated with higher export prices. The stylized fact that correlation between prices and revenue is more pronounce in richer destinations in Manova and Zhang (2012) is not found for this data. The analysis is extended with an section on the price dispersion within fourteen products over time adopting part of the framework used in Lach (2002). In this extension tentative evidence is found in favor of random pricing versus consistent pricing, this in the sense that firms do not consistently set high or low export prices over time when compared to local producers. Although prices that fall in the highest and lowest category have relatively lower mobility over time.


Formalizing the Middle-Income Trap

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The Middle–Income Trap is a term that has been used to label countries that break out of the lower income group but fail to attain high income status. However one of the main short comings of the Middle–Income Trap definition is the lack of a clear measure that distinguishes trapped countries from those that are not. This paper uses Maddison’s GDP per capita to create an absolute income classification in order to examine the evolution of middle–income countries over a time period of 60 years. An new duration definition is proposed in order to make a distinction between countries that are stuck and those that are not. This study finds, using different methods and approaches, that the estimated average transition time needed for countries to move past the middle–income segment is between 43-44 years. Therefore countries that have been classified as a middle–income country for a period longer than the estimated transition time should be classified as stuck in the Middle–Income Trap.


An Empirical Overview of Philippine Trade

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This paper is linked to the dataset that I have collected, merged and cleaned in the Philippines with the help of the Philippine Statistical Authority. In this paper the construction of the dataset is briefly discussed, after which an overview of the Philippine economy is given using the new dataset. The focus is mainly on the dynamics in concentration, prices and composition of trade in the Philippines in terms of exports, although the imports will also be discussed. This paper ends with a special focus on the top hundred products that the Philippines exports over the sample. These top products summarize the Philippine economy in a comprehensible way.