Aim high, shoot low? Product complexity and export survival in Latvia

Abstract

This paper investigates factors that contribute to the survival of export relationships at the firm and product levels using a large anonymised firm-level database for Latvia. It finds that some characteristics of exporting firms, such as a higher productivity level, larger size, lower indebtedness and higher profitability are associated with longer duration of export relationships. This paper also reveals the role of product characteristics for export product survival, in particular focusing on product absolute and relative complexity, as well as proximity to existing product basket. Exporting complex products improves the survival of trade relationships. However, exporting products that are more complex or distant from the firm’s previous export bundle reduces the chances of survival.