World Bank Says Big Companies Dominate Exports, While Newcomers See Churn
A handful of large companies dominate export markets in developing and developed countries, according to a new World Bank database. The bank said the data indicate the top one percent of companies often account for more than half -- and sometimes nearly 80 percent -- of total exports.
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The new Exporter Dynamics Database mainly covers 2003-2009, though data from the 1990s are also available for some countries. Measures cover the size distribution of exporting firms, their diversification in terms of products and markets, the dynamics of exporting firms' entry, exit and survival, and the average unit prices of the goods traded.
The bank said a key finding is that the export market is difficult to tackle for newcomers, with 57 percent of companies on average, and two-thirds in Africa, quitting within a year of entering the export market.
It said the database could help policy makers identify opportunities in particular sectors and address challenges faced by their exporters, especially in their entry and survival in export markets. The database can also make it easier to analyze the impact of tariffs and other trade barriers, it said.
The database indicates the rate of firms entering the export market is high, with more than half of the exporters in Laos, Malawi, Tanzania, and Yemen being newcomers in any given year. But more than a third of companies on average leave the export market every year. Martha Denisse Pierola, an economist at the Development Research Group who helped start the project, said there's a need for "further research to better assist governments in minimizing the costs associated with these high exit rates."