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Pathways to African Export Sustainability
Likewise, we will see that export promotion may have ambiguous effects on the sustainability of exports, possibly at times inducing exporters to spread themselves too thin. If export-promotion agencies are to contribute effectively to improve export sustainability, they probably need to include it as an explicit objective in the design and follow-up of assistance.
Thinking Strategically: Export-Expansion Paths We saw in chapter 3 that the scale and scope on which firms export matter for survival at the product-origin-destination level (by scale we mean the number of destinations to which a product is shipped, and by scope we mean the number of products shipped to a given destination). However, these effects—at least as they are modeled in empirical papers—are essentially static and so do not tell a full story. In addition, they may well reflect omitted variables; for instance, scale may pick up the quality of a product, although quality may not be explicitly included as a separate variable. We now turn to dynamic effects—how to develop, grow, and survive. The sequence in which exporters expand across foreign markets can make a difference to their survival prospects, according to findings by Carrère and Strauss-Kahn (2011). How much more sustainable are exports benefiting from prior product experience is shown in figure 4.1, which displays average first-year survival rates for product-origin cells on Organisation for Economic Co-operation and Development (OECD) markets (1) without prior extra-OECD experience (lower part of the bars) and (2) with one year of extra-OECD experience for the same product and origin. The effect is positive for exports originating from all regions (and significant, as these are regression results), but its magnitude varies substantially. For exports originating from East Asia and the Pacific, the first-year survival rate jumps by 11.6 percentage points, from 29.2 percent to 40.8 percent, a rise of over a third. For Sub-Saharan Africa, one year of experience outside the OECD raises the first-year survival rate by 7.4 percent—from 22 percent to 29.4 percent—a proportional increase of about one-third. Carrère and Strauss-Kahn (2011) extend these first-pass results using Cox regressions with various controls, including gravity-type variables (distance, contiguity), initial values, origin-country income, and so on. Results confirm that one year of prior extra-OECD experience significantly enhances survival (in a broader sense than just first-year survival probabilities, since Cox regressions take into account hazard rates