Exploring the duration of EU imports

Authors: Wolfgang Hess Maria Persson

Publish Date: 2011/07/27

Volume: 147, Issue: 4, Pages: 665-

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Abstract

The objective of this paper is to perform an empirical description and analysis of the duration of EU imports from the rest of the world Toward this aim we employ a rich data set of detailed imports to individual EU15 countries from 140 nonEU exporters covering the period 1962–2006 Using these data we both perform a thorough descriptive analysis of the duration of EU trade and test the data in a regression analysis using discretetime duration models with proper controls for unobserved heterogeneity Some interesting empirical findings emerge in our analysis First we find that EU imports from the rest of the world are very shortlived The median duration of EU imports is merely 1 year Moreover almost 60 of all spells cease during the first year of service and less than 10 survive the first 10 years Second we find that short duration is a persistent characteristic of trade throughout the extended time period that we study Third we find a set of statistically significant determinants of the duration of trade Among the more interesting determinants is export diversification which—both in terms of the number of products exported and the number of markets served with the given product—substantially lowers the hazard of trade flows dying For instance exporting a particular product to ten rather than one EU markets increases the probability of surviving the first year of trade in any given trade relationship by as much as 31 percentage points from 33 to 64This paper builds on the empirical part of Working Paper 200912 Department of Economics Lund University which was presented at the 2009 ETSG Conference in Rome and at seminars at Lund University and IFN in Stockholm We are very grateful to two anonymous referees for their constructive comments We would also like to thank conference and seminar participants and in particular Yves Bourdet Joakim Gullstrand Scott Hacker Magnus Henrekson Fredrik Sjöholm and Fredrik Wilhelmsson for many valuable comments We are very grateful to Paul Linge and the LUNARC team for providing us access to very powerful computing resources Financial support from the Jan Wallander and Tom Hedelius Foundation under research grant numbers P200601311 P200901891 and W200903521 and from the Marianne and Marcus Wallenberg Foundation is gratefully acknowledged

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