Firm size and the extensive margin

Abstract

In this paper we rely on firm-product-destination level data to analyze Hungarian trade expansion between 1992 and 2003. We decompose trade growth to the number of firms, the number of markets and products per firm, and analyze these dimensions by firm size. We also distinguish between new firms and continuing exporters. The results suggest that the majority of small exporters exit exporting after a few years, but the survivors grow very quickly in every dimension. Firm dynamics across size categories is intensive. Large exporters grow slowly, and macro shocks, destination market and product heterogeneity strongly affects their performance.