Martina Lawless
email: martina.lawless@centralbank.ie

Dermot Mcaleese

Frank Barry

Karl Whelan

Economics, L20 -General < L2 -Firm Objectives, Organization, and Behavior < L -Industrial Organization

Keywords: Entry, Spillovers and Tradability Firm Exports, Sunk Costs, Spillovers Firm export, initial conditions, tradability JEL: F19, D21

come

Introduction

Firm involvement in the export market is typically characterised by a high degree of persistence, which has been assumed to be due to the existence of a sunk cost of entry [START_REF] Krugman | Exchange Rate Instability[END_REF]. The increasing availability of firm level data has led to a number of papers testing the presence and extent of these sunk costs and firm decisions to export [START_REF] Roberts | The Decision to Export in Columbia: An Empirical Model of Entry with Sunk Costs[END_REF][START_REF] Bernard | Export Entry and Exit by German Firms[END_REF][START_REF] Bernard | Exporting and Productivity: The Importance of Reallocation[END_REF].

Recent literature in this area has also suggested that the sunk costs identified in entering the export market may be reduced if there are other domestic or multinational firms actively exporting in the same sector (e.g. [START_REF] Aitken | Spillovers, Foreign Investment and Export Behaviour[END_REF]. Such positive spillovers to firms entering the export market could arise from a variety of sources, such as knowledge spillovers relating to the structure and conditions of the foreign markets, or possibly even more directly through improved transport infrastructure and increasing access to distribution networks.

We use a two-step estimation procedure suggested by [START_REF] Orme | The Initial Conditions Problem and Two-Step Estimation in Discrete Panel Data Models[END_REF][START_REF] Orme | Two-Step Inference in Dynamic Non-Linear Panel Data Models[END_REF] to control for the influence of initial conditions. This is a variant of the [START_REF] Heckman | The Incidental Parameters Problem and the Problem of Initial Conditions in estimating a Discrete-Time Data Stochastic Process[END_REF] estimation methodology used by [START_REF] Roberts | The Decision to Export in Columbia: An Empirical Model of Entry with Sunk Costs[END_REF]. This adjustment allows us to control for the fact that many firms in the survey were already exporters before our first sample period and the unobservable pre-sample characteristics and decisions of the firm may be important in explaining their decisions during the observed sample period. The method We apply this two-step methodology to an unusually long time-series of firm data, with a consistent survey available from 1983 to 1999. Another novelty of this paper is the introduction of a 'sector tradability' index, based on [START_REF] Swan | The Emerging Australian Manufacturing Export Response to Microeconomic Reform[END_REF] in order to separate the sunk costs interpretation of exporting experience from sector characteristics that might influence entry into exporting. This index has a positive and significant impact on export market participation, but the coefficient on past exporting remains large and significant in the specification including the tradability index. This paper uses data on a sample of Irish firms over seventeen years to test the hypothesis that sunk costs influence the decision to enter or exit the export market. A probit specification tests the probability of exporting in the current period given past exporting experience, controlling for the firm's initial export status. We find significant inertia in firm movements in and out of exporting, with previous export activity a strong explanatory factor for current export market participation.

In addition, this paper tests for the existence of spillover effects in exporting, in particular if the levels of export activity in a sector increase the probability of a firm participating in the export market. It also looks at how these spillovers may differ depending on whether their source is export activity of Irish domestic firms or of multinationals exporting from a base in Ireland. Research on other countries has found mixed results when testing the 3 presence and extent of influence of aggregate exporting on individual firm decisions. We find no significant impact of spillovers, either from sector exports or multinational presence, once the firm's own export history is controlled for.

The paper proceeds as follows: section 2 reviews the recent literature on sunk costs and spillovers in firm entry to the export market. Section 3 outlines the theoretical model and section 4 details the empirical model to be tested, as well as discussing some relevant econometric issues. Section 5 describes the data and section 6 presents the empirical results. Section 7 concludes.

2.

Literature Review

Sunk Costs

Firm-level export decisions and performance are relatively recent and growing areas of interest in the economic literature. [START_REF] Roberts | The Decision to Export in Columbia: An Empirical Model of Entry with Sunk Costs[END_REF] tested for the existence of hysteresis in export activity for a sample of 650 Columbian firms throughout the 1980s and found a significant impact of sunk costs. The presence of sunk costs can be detected by testing if the previous export activity of the firm can be used to explain its current status, controlling for other firm-level characteristics that may influence export activity.

In their paper, previous participation in exporting was found to increase the probability of current export activity by up to sixty percent. [START_REF] Hölzl | Tangible and Intangible Sunk Costs and the Entry and Exit of Firms in an Small Open Economy: The Case of Austria[END_REF]. In the export market, sunk costs result in transitory changes, perhaps in the exchange rate or in trade policy, having permanent effects on the export activity of firms. Examples of sunk costs in exporting are thought to be mainly those of information gathering on the new market, setting up new distribution networks, marketing and possibly repackaging of the product to appeal to new consumers etc. A further interesting finding of the Roberts and Tybout analysis is the speed at which the benefit of experience in the foreign market can evaporate if the firm ceases to export. Firms which had previously exported, but exited the export market two years previously, were found to have the same probability of reentering the export market as a firm which had never exported before, implying that the full amount of sunk costs were incurred at re-entry.

In addition to the positive and significant influence of a history of exporting (indicating the presence of sunk costs), a number of other plant characteristics were found to impact the probability of being an exporter. Factors such as plant size, age and ownership by a corporation were found to increase the probability of exporting. Location, particularly in terms of distance to a port, was also found to be significant. However, no impact was found either for wages or for a measure of relative export to domestic prices (although the inclusion of time dummies would have already controlled for much of the impact of price changes). Broadly similar results were found for German firms, with export history increasing the probability of current inclusion in the export market by up to 50 percent, depending on the specification [START_REF] Bernard | Export Entry and Exit by German Firms[END_REF]. In addition to the other firm characteristics looked at by [START_REF] Roberts | The Decision to Export in Columbia: An Empirical Model of Entry with Sunk Costs[END_REF], higher levels of productivity were also found to positively affect the probability of exporting. The direction of the relationship between exporting and productivity has been the subject of a number of inquiries, for example [START_REF] Bernard | Exporting and Productivity: The Importance of Reallocation[END_REF]. Due to data constraints, this relationship is not explicitly examined in this paper. [START_REF] Bernard | Why some firms export[END_REF] take both sunk costs and spillovers into account in their analysis of the export decision of US firms. They find similar effects of plant characteristics, with larger, high-wage, more productive plants being more likely to export. They also find significant sunk costs exist in entering the export market, with exporting in the previous period increasing the probability of current exporting by approximately 36 percent. However, neither geographic nor industry spillovers were detected.

Spillovers

Extending the idea that sunk costs play a role in firm export activity, [START_REF] Aitken | Spillovers, Foreign Investment and Export Behaviour[END_REF] look at whether these sunk costs can be affected by spillovers from other firms. For example, a firm in an export intensive sector may find its cost of entering the foreign market reduced by the export activity of other firms. [1986][1987][1988][1989][1990], the main result that emerges is that multinational firms do have a positive spillover effect on the probability of domestic firms exporting.

However, no such spillover effect is found for sector-level exporting activity. Looking at plant characteristics, they find larger plants are more likely to export, but unlike Roberts and Tybout (1997) they find higher wages (as a proxy for skill levels perhaps) also increases the likelihood of being an exporter.

On the related issue of the export intensity of firms who have already made the initial decision to export, [START_REF] Roper | The determinants of export performance: panel data evidence for Irish manufacturing plants[END_REF] find that some of the firm characteristics identified as important in the export decision papers can also impact on export intensity.

Roper and Love's results were based on survey data from the Irish Innovation Panel, which collected information on manufacturing firms with more than ten employees from 1996-1999 in the Republic of Ireland and Northern Ireland. Of these firms, export propensity was 30% in the Republic and 18% in Northern Ireland. Export behaviour of large plants was similar in both areas, but smaller firms (i.e. those with less than fifty employees) exported 10% less in Northern Ireland compared to firms with similar characteristics in the Republic. The highest export intensity was found amongst the large, foreign owned firms, particularly those with a high percentage of graduate employees.

R&D activity was positively associated with export intensity, although the type of R&D that had an effect different according to firm ownership and size.

Model

The theoretical basis of sunk cost models was developed by [START_REF] Dixit | Entry and Exit Decisions under Uncertainty[END_REF] and [START_REF] Krugman | Exchange Rate Instability[END_REF], and applied empirically to the decision to enter the export market by [START_REF] Roberts | The Decision to Export in Columbia: An Empirical Model of Entry with Sunk Costs[END_REF] and [START_REF] Bernard | Why some firms export[END_REF]. This section outlines the model used by [START_REF] Bernard | Export Entry and Exit by German Firms[END_REF] and [START_REF] Bernard | Why some firms export[END_REF]. They in turn follow the structure of [START_REF] Roberts | The Decision to Export in Columbia: An Empirical Model of Entry with Sunk Costs[END_REF] whereby the decision to export is made in a similar way to a rational firm's decision to begin producing a new product. The profitmaximising firm makes its export entry decision based on expected profits from exporting, now and in the future, taking into account the fixed costs of entering the new market. The foreign market is treated here as a single unit.

We maintain the assumption of [START_REF] Bernard | Export Entry and Exit by German Firms[END_REF] that exporting experience does not impact the cost function of the firm. The costs we want to analyse are any costs that may be involved in entering the export market, for example in marketing, setting up distribution networks etc. These costs are assumed to be sunk and are incurred in full if the firm has left the export market for any period of time. It is assumed that the profitmaximising level of exports, q * it can always be produced by the firm, once it is in the foreign market.

Including entry costs of N results in firm profits given by

( ) ( ) ( ) 1 , * * 1 , 1 , , , ~ = t i it it t it it t t i it t it Y N q Z X c q p Y Z X (1)
Where p t is the price of the exported goods, and c it (.) is the variable cost of producing the goods for the export market. Exogenous factors affecting profitability are given by X t

Y it = 1 if R it 0 (2) = 0 if R it < 0 (3)
If the firm exported in the previous period, Y i,t-1 = 1, then the firm does not have to pay any sunk cost. The firm will export if its expected profits, this time net of the sunk cost, are greater than zero, Y it =1 if ~it > 0.

Empirical Specification

From the multi-period model above, the firm will enter the export market if its expected current and future profits from doing so are greater than the costs involved,

Y it = 1 if ( ) 1 , 1 ~ + > t i it it Y N c (4) = 0 otherwise (5)
Rather than attempt to parameterise the cost function, we follow [START_REF] Bernard | Export Entry and Exit by German Firms[END_REF] in focusing on identifying the factors that increase the probability that a firm will be an exporter. This is estimated using a binary choice non-structural approach given by

Y it = 1 if Z it -N(1-Y i,t-1 ) + it > 0 (6) = 0 otherwise (7)
With the vector Z it denoting plant characteristics, while the residual term it captures any other effects (such as terms of trade shocks, which would have formed part of X above). The plant characteristics that will be included in the vector Z it follow those that have been found to have an impact in previous studies. They include measures of plant success, namely size (numbers employed) and productivity (output per worker), as the literature has consistently found that better firms are more likely to be exporters. Wages will also be included as a proxy for the skill level of the workforce, which would be expected to have a positive effect on exporting probability. A dummy for foreign ownership will be included as it is frequently assumed that the presence of foreign firms in Ireland relates to a desire to use it as an export base for the EU market. Foreign ownership should therefore have a strong positive effect on export status.

Following [START_REF] Aitken | Spillovers, Foreign Investment and Export Behaviour[END_REF], spillover effects are included in the model by allowing the distribution costs in the foreign market for a firm to be a function of the total exporting activity in the sector to which the firm belongs, and also a function of the MNE export activity in the sector. This enables testing of different spillover effects from exporters in general and more specifically from multinationals' exports. Total export activity in the sector is denoted as EX , and multinational export activity as MNE .

Econometric Issues 1: Lagged Endogenous Variable [START_REF] Bernard | Why some firms export[END_REF], and [START_REF] Bernard | Export Entry and Exit by German Firms[END_REF] discuss the main potential problem in this estimation as being the identification of the parameter on the lagged endogenous variable. As it is possible that there are permanent and serially correlated unobserved characteristics of the firm that could be influencing its decision to export, the error term it will be made up of two components, one of which is a permanent firm

Y it = 1 if WZ i,t-1 + XY i,t-1 + Y i + Z it > 0 (8) = 0 otherwise (9)
If there are sunk costs in entering the export market, the coefficient on the previous period's export activity should have a significant and positive effect on current exporting activity. To test how quickly this effect diminishes, export status of the two previous periods will also be included.

Econometric issues 2: Initial Conditions Problem

There is an additional issue to be addressed in the estimation of this type of model. The 'initial conditions' problem arises when the start of the sample period is not the same as the start of the process that generates firm export decisions. The sample period begins in 1983, but many of the firms covered may have been in operation and/or exporting before this period. Whether or not a firm exports in 1983 may therefore be the result of earlier experiences or due to other observable or unobservable characteristics. The initial conditions problem is dealt with by following [START_REF] Heckman | The Incidental Parameters Problem and the Problem of Initial Conditions in estimating a Discrete-Time Data Stochastic Process[END_REF] and specifying a reduced form equation for the initial observation:

i i i u X Y + = ' F o r P e e r R e v i e w 11
where var(u i ) = ] 2 u , with corr(Y i , u i ) = ^and X i is a vector of exogenous instruments which includes variables relevant in period 1 and other pre-sample information. To account for a non-zero ^, a linear relationship is assumed between error components:

1 i i i u + = (11)
With Y i and Z i1 orthogonal to one another, _= ^`u /`Y and var(ui1)= `2u (1-^2). We assume that the initial observation y i1 is uncorrelated with u it and that u i1 is uncorrelated with the firm characteristics Z it . The 'initial conditions' equation now becomes:

1 * 1 ' i i i i X Y + + = i = 1,…N and t=1 ( 12
)
Together with equation ( 13) this now represents a complete model for the export decision process. It is possible to estimate this system of equations by programming the maximum likelihood estimation, as is done by [START_REF] Roberts | The Decision to Export in Columbia: An Empirical Model of Entry with Sunk Costs[END_REF]. However, a more practical two-step estimation procedure has been suggested by [START_REF] Orme | The Initial Conditions Problem and Two-Step Estimation in Discrete Panel Data Models[END_REF] and further developed in [START_REF] Orme | Two-Step Inference in Dynamic Non-Linear Panel Data Models[END_REF]. This procedure has been implemented by [START_REF] Arulampalam | Unemployment persistence[END_REF] to test state dependence in unemployment and by [START_REF] Henley | Self-Employment Status: The Role of State Dependence and Initial Conditions[END_REF] for persistence in self-employment.

This two-step procedure involves first estimating the initial conditions probit equation (for the first year of the sample period) and then using the generalised residuals from this as a correction to the random effects probit model for the rest of the sample. The form of the random effects model under this procedure is shown by transforming equation (11), which becomes:

i i i e u + = (13)
it i i t i t i it e u Y Z Y + + + + = 1 , 1 , i = 1,…N and t = 2,…T i (14)
Orme's method involves first estimating the reduced equation for the initial time period 1

(equation 12). The probit error from this estimation is then used to replace u i in a random effects probit estimation of ( 14). The importance of the initial conditions correction can be estimated from a standard t-test on the significance of b.

Data

The data are taken from the annual Forfás Irish Economy Expenditures Survey covering Irish firms over the period 1983 to 1999, which is sent to all firms of over 30 employees.

The survey contains information on sales, exports, employment, expenditures and ownership, amongst other things. The available data is an unbalanced panel with approximately half of the sample being exporters. For the initial conditions correction model, firms have to have a common entry date to the sample and this results in the number of observations being just over 4500.

Table 1 presents some summary statistics for three years of the sample (1983, 1990 and 1998), comparing characteristics of exporting and non-exporting firms. Exporters are generally larger, both in terms of sales and employment and pay higher wages (except in 1983). These differences remain fairly constant throughout the sample period. Table 2 1 It is important to note that when using this system including the 'initial conditions' correction, we must have all plants entering the panel at the same start time. shows the level of persistence in firm export activity. The number of firms entering or exiting the export market is low over the entire seventeen-year period. This is not unusual; [START_REF] Bernard | Export Entry and Exit by German Firms[END_REF] find similar percentages of entry and exit in their German study. Firms exporting in any period t are overwhelmingly likely to have exported in the previous period. This implies that exporting firms are significantly different from non-exporters in some way that allows them to compete internationally, or that there are sunk costs to entering the export market, generating hysteresis in firm export status.

Correlations between selected variables are presented in Table 3. As predicted by the existing research, positive relationships exist between export status and firm characteristics such as size (both in terms of sales and employment), wages and valueadded per employee. In addition, we find positive correlations between some of the firm characteristics that will be used as explanatory variables, although none of these are large enough to be a particular cause of concern. The high correlation between sector sales and sector employment indicate that these variables should be used individually to avoid collinearity problems when testing for spillovers. The possibility of collinearity between wages per employee and value-added per employee will also be addressed by including alternative specifications of the regressions where the two variables are included separately.

Results

Introducing the initial conditions correction, Table 4 presents the results for export status in 1983. Foreign ownership is positively related to export market involvement, as is presence in a high technology sector. The technology dummy is 0 for a high technology firm and 1 for a traditional or low technology firm 2 . The negative coefficient implies that low technology firms are less likely to export.

The residuals from the regressions in Table 4 are then used to adjust for initial conditions, the results of which are shown in Table 5. Previous exporting experience, included as export status lagged one and two periods, shows a highly significant effect of past exporting activity on current exporting. The initial conditions variable is significant, and firm characteristics are found to be important determinants of whether or not the firm is an exporter. Employment is positive and significant, showing that larger firms are more likely to export, which can be interpreted as an indicator of economies of scale for the firm. Wages per employee are somewhat surprisingly found to have a negative coefficient but is only weakly significant and value-added per employee is insignificant in all specifications. This is true even when both variables are included separately (columns IV and V) to avoid collinearity, and contrasts with the positive simple correlations found in Table 3.

Spillovers are introduced in Table 6, with two measures used as proxies. First, the exports from Irish and Foreign firms in the firm's sector are used to test for spillovers 2 The sectoral technology dummy is based on the [START_REF] Davies | Industrial Organisation in the European Union[END_REF] The interpretation of the variables used to proxy sunk costs and spillovers (i.e. lagged exporting, multinational and domestic exports and employment) have so far followed those of the literature in this area, particularly [START_REF] Roberts | The Decision to Export in Columbia: An Empirical Model of Entry with Sunk Costs[END_REF] and [START_REF] Aitken | Spillovers, Foreign Investment and Export Behaviour[END_REF]. However, it is possible that these proxies are in fact picking up information on the 'tradability' of sectors. A highly tradable sector would have low trading costs, both fixed and variable, and it may not be possible to separate this empirically from low sunk costs of market entry. The same is true of our proxy for spillovers; sectors with high levels of exports and high probability of entry to exporting could be those with easily tradable products, without any necessity for the existence of informational or competitive spillovers. These explanations are not necessarily mutually exclusive -the existence and level of sunk costs would be a factor in determining how tradable a sector is -however it would widen our interpretation of the exporting experience variable to include a wider range of influences on the exporting decision.

An attempt is made in the final empirical specification to separate this issue of sector tradability from the influence of the firm's past exporting record. To do this a new variable is introduced; an index of sectors designed to capture the ease with which they 7. The index is constructed as a ratio of trade to production, using data from Japan and the US. The index ranges from zero (non-tradable goods) such as retail trade and government to 62 (the most tradable sector) for water transport. The most tradable sector to which firms in our sample belong is precision instruments with a tradability index of 46; the least tradable is printing with a value of 4. The lowest tradability sectors are mainly services, which are not represented in the firm survey.

The index of tradability is included in Table 8 and is found to have a positive and significant effect on the probability of exporting. Spillover effects, from sector exports or size, are not present in this specification. However, past export status remains a significant determinant of current exporting. The coefficient on export status in the previous period has fallen slightly however; in this specification it is 2.71 compared to 2.89 in Table 6 (which uses the same specification apart from the inclusion of the tradability variable). This indicates that some information on sector tradability could have been picked up by the lagged export status variable in the earlier specifications.

3 The information contained in the tradability index would also be picked up empirically by the inclusion of industry dummies. The attraction of the index is that it ranks sectors along a specific dimension relating to their share of international trade and its relationship with firm exporting can therefore be given an interpretation in terms of exporting and sunk costs. While not reported, substituting with industry dummies does not affect the results of the significant and positive coefficients on past exporting found through out the paper.

Conclusions

The importance of exporting for the health of the economy necessitates an understanding of what factors determine the export decisions of firms. In particular, the issue of whether entry to the export market is characterised by sunk costs would have significant implications for understanding entry and exit patterns to exporting and for the success of government policies designed to encourage firms to export. Likewise, if the existence of spillovers from currently exporting firms could reduce the sunk costs of entry to the export market, additional positive externalities could accrue to export promotion strategies.

In order to address the issue that pre-sample decisions may have effected firms' exporting in the period covered by the current data, a procedure to control for initial conditions is also used. The paper uses annual firm level data from 1983 to 1999 to examine the issues of sunk costs and spillovers in the export decision. This paper demonstrates that there is a high level of persistence in firms' export status, even when controlling for firm characteristics and unobserved heterogeneity. Past exporting experience influences current export status, and this result is robust in all specifications.

Other factors that increase the probability of a firms' participation in the export market include foreign ownership and being in a high technology sector. Value-added is another significant variable, indicating that higher productivity firms and exporting are positively linked. However, the direction of causation between productivity and exporting activity is not clear. Firm size, measured by employment, showed that larger firms are more likely to be exporters. The inclusion of initial conditions in the export decision specification was significant, demonstrating the importance of this control variable to pick up unobservable firm characteristics that influence the export decision. When sunk costs and spillovers were tested together and initial conditions were controlled for, the effect of spillovers was not significant.

The final section of the paper examines the robustness of the sunk costs and spillovers specification to the inclusion of a variable measuring the tradability of the sector. Using an index developed by [START_REF] Swan | The Emerging Australian Manufacturing Export Response to Microeconomic Reform[END_REF], being in a sector with a higher degree of tradability is found to positively effect the probability of a firm being an exporter.

Lagged export status remains a significant variable, albeit with a rather smaller coefficient. Once again, no evidence of spillover effects is found.

The finding that past export experience lowers the current cost of exporting, so that otherwise identical incumbent and potential exporters react differently to changes in export market conditions may have important policy consequences. It implies that if policymakers are interested in encouraging exporting, strategies targeted at reducing sunk costs may be the most successful route, as they would be more likely to increase the base of exporting firms. Sunk costs could be reduced to some extent through increasing the availability of information about international markets and facilitating access to distribution networks; this would reduce one potential cost in becoming an exporter, namely the research required prior to entry into exporting.

F

  the first sample period separately and uses the residuals as a variable in the panel estimations that follow.

  g. macroeconomic conditions), and firm specific factors by Z it . Variables that may be included in this firm specific term could include size, skill composition of labour force, productivity, product characteristics and ownership structure. If the expected profits are positive, then the firm will become an exporter. The export status of the firm i in period t is denoted by Y it , where

  internationally. 3 This is based on[START_REF] Swan | The Emerging Australian Manufacturing Export Response to Microeconomic Reform[END_REF], although the sector coverage of their study was much wider. The index values used in this paper are presented in Table

  and another transitory effect to pick up exogenous shocks, it . Given the (0, 1) nature of the dependent variable, the estimation methods that can be used for this model include probit with random effects, and linear probability models with fixed or random effects. The random effects probit is given by

	specific effect,
	F o
	r
	P
	e e r
	R e v i e w
	10

i

Page 12 of 28 Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK

	Submitted Manuscript
	Where b=^`Y/`e and var(e i )= `Y2 (1-^2). Substitution for Y i in the random effects probit
	equation gives:
	F o
	r
	P
	e e r
	R e v i e w
	12

  classification. I would like to thank Ciara Whelan of University College Dublin for providing the command files for the technology classification and converting of industry codes. if these spillovers are different from foreign owned firms. The second measure is sector size, measured by employment, for Irish and Foreign owned firms. This is to test if there are direct spillovers to export activity from foreign presence in a sector, irrespective of the level of actual exports from the foreign firms. No evidence of spillovers are found in this specification.

	from exporting and
	F o
	r
	P
	e e r
	R e v i e w
	15

Table 1 : Mean Values of Firm Characteristics for Exporters and Non-Exporters, 1983, 1990 and 1998

 1

	o
	r
	P
	e e r
	R e v i e w

Page 22 of 28 Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK

	Submitted Manuscript
	F o
	r
	P
	e e r
	R e v i e w
	22

Table 2 : Persistence of Exporting Status

 2

		No. Exporters % Exitors % Entrants % Stayers
	1984	471	1.1	2.1	96.8
	1985	544	0.7	2.2	97.1
	1986	573	0.3	1.2	98.4
	1987	601	1.2	1.3	97.5
	1988	662	1.7	1.8	96.5
	1989	697	2.6	2.0	95.4
	1990	773	0.6	3.0	96.4
	1991	847	0.9	2.1	96.9
	1992	1154	1.0	2.4	96.5
	1993	1118	1.9	2.1	96.0
	1994	1021	1.0	2.0	97.1
	1995	1058	0.6	1.3	98.1
	1996	1188	1.0	1.9	97.1
	1997	1204	0.8	1.0	98.2
	1998	1371	0.5	0.7	98.8
	1999	1215	0.6	1.3	98.1

Table 3 : Correlations between Main Characteristics

 3

		Export	Firm	Firm	Wage per	Value-added	Sector	Sector
		Status	Sales	Employment	Employee	per Employee	Sales	Employment
	Export Status	1.00
	Firm Sales	0.07	1.00
	Firm Emp.	0.11	0.62	1.00
	Wage per
	Employee	0.02	0.30	0.22	1.00
	Value-Added
	per Employee	0.05	0.41	0.04	0.22	1.00
	Sector Sales	0.06	0.26	0.08	0.24	0.16	1.00
	Sector
	Employment	0.07	0.17	0.12	0.04	0.10	0.70	1.00

Page 23 of 28 Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK

	Submitted Manuscript
	F o
	r
	P
	e e r
	R e v i e w

Table 4 : Initial Conditions Equation Export Status in 1983

 4

		(I)	(II)	(III)
	Firm Age	-0.00729**	-0.0103***	-0.00869**
		(0.0037)	(0.00389)	(0.0041)
	Ownership	0.8912***	0.8498***	0.7697***
		(0.1426)	(0.1476)	(0.158)
	Low Technology	-0.5869***	-0.6179***	-0.098
	Dummy
		(0.1634)	(0.1657)	(0.1857)
	Sales		0.0000174**	0.000034***
			(0.0000007)	(0.000012)
	Employment		0.003**	0.0026**
			(-0.00118)	(0.0013)
	Wages		-0.00019***	-0.0002***
			(0.000059)	(0.00007)
	Sector Exports			0.000016***
				(0.00000024)
	Sector Sales			-0.0000094***
				(0.0000015)
	Sector Employment			0.000084
				(0.000091)
	Location Controls	Yes	Yes	Yes
	Sector Controls	Yes	Yes	Yes
	N	647	647	647
	Standard Errors in parentheses
	*** Significant at 1% level, ** at 5% level and * at 10% level

Table 5 : Decision to Export

 5

		(I)	(II)	(III)	(IV)	(V)
	Export Status t-1	2.897***	2.904***	2.886***	2.895**	2.901***
		(0.157)	(0.1572)	(0.158)	(0.156)	(0.157)
	Export Status t-2	0.7052***	0.7147***	0.6724***	0.732***	0.702***
		(0.1608)	(0.161)	(0.1627)	(0.159)	(0.161)
	Employment (t-1)	0.00088*	0.000854*	0.00085*	0.0006	0.0009**
		(0.00047)	(0.000477)	(0.00048)	(0.0004)	(0.0005)
	Employment	-0.00000026	-0.000000278	-0.00000028 -0.0000006 -0.0000003
	Squared (t-1)
		(0.000000299)	(0.00000031)	(0.00000032) (0.0000003) (0.0000003)
	Wage per	-0.0123**	-0.0106*	-0.0088		-0.0118*
	Employee (t-1)
		(0.0065)	(0.0063)	(0.006)		(0.006)
	VA per	0.00324	0.00328	0.00325	0.0031
	Employee (t-1)
		(0.00204)	(0.00205)	(0.002)	(0.002)
	Probit Residual	1.031***			0.8288**	1.0917***
	(I)
		(0.376)			(0.359)	(0.373)
	Probit Residual		0.7173**
	(II)
			(0.318)
	Probit Residual			0.8325***
	(III)
				(0.2396)
	N	4529	4529	4529	4529	4529
	Standard Errors in parentheses
	*** Significant at 1% level, ** at 5% level and * at 10% level

Page 25 of 28 Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK

	Submitted Manuscript
	F o
	r
	P
	e e r
	R e v i e w

Table 6 : Decision to Export -Sunk Costs and Spillovers

 6

		Submitted Manuscript
		(I)	(II)	(III)	(IV)
	Export Status t-1	2.89***	2.89***	2.89***	2.89***
		(0.157)	(0.1574)	(0.157)	(0.158)
	Export Status t-2	0.696***	0.693***	0.722***	0.685***
		(0.161)	(0.162)	(0.161)	(0.162)
	Sector Exports	-0.000000064		-0.00000006 -0.00000005
	(Irish)
		(0.00000017)		(0.0000002) (0.0000002)
	Sector Exports	0.000000176		0.0000002	0.0000002
	(Foreign)
		(0.000000155)		(0.00000015) (0.00000015)
	Sector Size (Irish)		-0.0000116
			(0.00002)
	Sector Size		0.00005
	(Foreign)
			(0.000039)
	Employment (t-1)	0.00067**	0.00065**	0.00047*	0.00066**
		(0.00028)	(0.0029)	(0.0003)	(0.0003)
	Wage per	-0.00847	-0.0075		-0.0152**
	Employee (t-1)
		(0.00539)	(0.0055)		(0.0069)
	VA per Employee	0.0011	0.00114	0.0029
	(t-1)
		(0.002)	(0.0021)	(0.0022)
	Probit Residual (I)	0.8445**	0.71318**	0.699*	0.980**
		(0.396)	(0.421)	(0.385)	(0.400)
	Year	Yes	Yes	Yes	Yes
	N	4529	4528	4529	4529
	Standard Errors in parentheses

*** Significant at 1% level, ** at 5% level and * at 10% level Page 26 of 28 Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK

Table 7 : Sector Tradability Index

 7

	Sector Description	Nace-Clio Code	Tradability
	Precision instruments	371	46
	Telecommunications equipment	344	39
	Jewellery	491	33
	Office machinery	330	26
	Optical instruments	373	25
	Pharmaceutical products	257	24
	Electric motors	342	24
	Electrical equipment for industry	343	21
	Synthetic fibres	260	20
	Woven materials	432	19
	Secondary processing metal	313	18
	Machinery & mechanical equipment	328	16
	Medico-surgical equipment	372	15
	Pens & other products	495	14
	Electric household appliances	346	12
	Household linen	455	12
	Footwear	451	10
	Soaps, perfumes etc	258	9
	Clothing	453	8
	Rubber products	481	8
	Plastic products	483	8
	Spare parts -motor vehicles	353	7
	Machinery for building & mining	325	6
	Concrete, cement	243	5
	Printing	473	4
	Based on Swan and Zeitsch (1992)

Page 27 of 28 Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK

	Submitted Manuscript
	F o
	r
	P
	e e r
	R e v i e w
	27

Table 8 : Decision to Export -Sector Tradability

 8

	(I)	(II)

Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript

Editorial Office, Dept of Economics, Warwick University, Coventry CV4 7AL, UK Submitted Manuscript