Recently, the paper Exporter Survival with Uncertainty and Experimentation, co-authored by Yin Yongkun, Assistant Researcher at the School of Economics, Shandong University, Sebastián Fanelli from the Centre for Monetary and Financial Studies (CEMFI, Spain), and Juan Carlos Hallak from the Universidad de Buenos Aires, Argentina, has been published in the Journal of International Economics, a top journal in international economics. This study sheds light on the critical roles of uncertainty and export experimentation in firm export dynamics.

Using Peruvian firm-level customs data spanning 1993–2008, the study finds that exporters entering foreign markets for the first time exhibit low survival rates, while firms re-entering the same market after exit achieve higher survival rates. To explain this pattern, the paper develops a firm dynamics model incorporating uncertainty and export experimentation: firms can only gradually learn about the profit potential of their products after they actually enter foreign markets. Accordingly, firms may be willing to enter overseas markets to conduct “experimentation” even if they incur short-run losses. Firms will exit rapidly if experimentation yields poor outcomes, which accounts for the low survival rate. In contrast, some re-entrant firms have acquired richer market information, so they make more cautious decisions upon re-entry and attain correspondingly higher survival rates. The study further documents that firms exporting differentiated products and to more distant markets have lower survival rates, consistent with the interpretation of greater market uncertainty. The results suggest that firms’ learning and experimentation in foreign markets constitute an essential mechanism for understanding export dynamics.

Yin Yongkun is Assistant Researcher at the School of Economics, Shandong University. He received his PhD from the Centre for Monetary and Financial Studies (CEMFI), Spain. His work has appeared in journals including the European Economic Review and Journal of Demographic Economics.