Export Destinations and Input Prices

Paulo Bastos Joana Silva Eric Verhoogen July 2017

Appendix A For Online Publication

Figure A1. Real exchange rate, selected richer destinations

2001

2003

2005

150

200

1999

2001

2003

2005

1997

1999

2001

Switzerland

Norway

Japan

2003

2005

year

Notes: Real exchange rate calculated as

2003

2005

150 100

relative price level (1997=100)

0

1997

1999

2001 year

hkt , CP Iht /CP Ikt

2005

50

150 100

relative price level (1997=100)

0

50

150 100

2001

2003

200

year

200

year

50

1999

100

relative price level (1997=100)

0

1997

year

0

1997

50

150 100

relative price level (1997=100)

0

50

150 100

relative price level (1997=100)

50 0

1999

200

1997

relative price level (1997=100)

Sweden

200

USA

200

UK

2003

2005

1997

1999

2001 year

where hkt is the nominal exchange rate (defined as units of home (h) currency per unit of currency in destination

k). (Refer to equation (20).) Given this definition, an increase reflects a real appreciation in the destination relative to Portugal. Real exchange rate normalized to 100 in 1997.

Figure A2. Real exchange rate, selected poorer destinations

2001

2003

2005

150

200

1999

2001

2003

2005

1997

1999

2001

Morocco

Hungary

Russia

2003

2005

year

Notes: Real exchange rate calculated as

2003

2005

150 100

relative price level (1997=100)

0

1997

1999

2001 year

hkt , CP Iht /CP Ikt

2005

50

150 100

relative price level (1997=100)

0

50

150 100

2001

2003

200

year

200

year

50

1999

100

relative price level (1997=100)

0

1997

year

0

1997

50

150 100

relative price level (1997=100)

0

50

150 100

relative price level (1997=100)

50 0

1999

200

1997

relative price level (1997=100)

Turkey

200

Angola

200

Brazil

2003

2005

1997

1999

2001 year

where hkt is the nominal exchange rate (defined as units of home (h) currency per unit of currency in destination

k). (Refer to equation (20).) Given this definition, an increase reflects a real appreciation in the destination relative to Portugal. Real exchange rate normalized to 100 in 1997.

0

avg. number of source countries 10 20 30

40

Figure A3. Non-overlap between export destinations and import sources

5

10

15 20 25 number of export destinations

30

35

40

0

5

10

15 20 25 number of export destinations

30

35

40

0

.05

fraction of sample .1 .15 .2

.25

.3

0

Notes: Sample is firms in the baseline estimation sample in 1997 with positive exports to one or more of top 100 non-Euro-zone destinations. Number of export destinations refers to non-Euro-zone destinations and is top-coded at 40; fewer than .1% of firms are above the top-code. The top panel illustrates the average number of source countries (hollow bars) and average number of source countries that are also destinations (gray bars), for firms with the number of destinations indicated on the x-axis. The line is a 45-degree line. The bottom panel is a histogram of the fraction of firms with the indicated numbers of export destinations.

.05 0 −.05 −.1 −.15

coeff. on log(RER), first stage

.1

Figure A4. First-stage coefficients from alternative IV procedure

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

income group

Notes: Figure plots first-stage coefficients on income-group instruments (log(RERigt ) for different income groups as defined in equation (22)) from Column 5 of Table 7, with 90% confidence intervals. Portugal’s own income would put it in income group 4.

0 −.5 −1

coeff. on log(RER), reduced form

.5

Figure A5. Reduced-form coefficients from alternative IV procedure

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

income group

Notes: Figure plots reduced-form coefficients on income-group instruments (log(RERigt ) for different income groups as defined in equation (22)) from Column 5 of Table A10, with 90% confidence intervals. Portugal’s own income would put it in income group 4.

Table A1. Summary statistics: exports, imports, initial income, 1997 export share

Germany Spain France United Kingdom Netherlands Belgium-Luxemburg United States Italy Sweden Denmark Austria Switzerland Brazil Norway Japan Finland Angola Greece Singapore Israel Turkey Ireland Australia Canada Morocco Hungary Russia South Africa Chile Hong Kong Poland Cape Verde China Saudi Arabia Argentina Tunisia Korea Czech Republic Algeria Mexico Mozambique Thailand Guinea-Bissau Panama Venezuela India Egypt Cyprus New Zealand Slovak Republic

import share

export rank

all exports

est. sample

import rank

all imports

est. sample

income rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

0.206 0.148 0.145 0.124 0.051 0.045 0.041 0.040 0.022 0.018 0.012 0.013 0.010 0.008 0.006 0.008 0.018 0.004 0.004 0.004 0.004 0.005 0.004 0.006 0.004 0.003 0.003 0.003 0.002 0.002 0.002 0.004 0.002 0.002 0.001 0.001 0.001 0.001 0.001 0.001 0.002 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.000

0.211 0.150 0.151 0.130 0.054 0.052 0.038 0.039 0.019 0.018 0.013 0.011 0.009 0.008 0.005 0.007 0.007 0.005 0.002 0.005 0.005 0.004 0.004 0.004 0.004 0.003 0.004 0.003 0.003 0.002 0.002 0.002 0.002 0.001 0.002 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.001 0.000 0.001 0.001 0.001 0.001 0.001 0.001

2 1 3 4 6 8 9 5 13 17 15 16 10 11 7 18 34 41 28 43 22 20 83 31 29 94 14 21 66 65 52 64 26 91 60 38 12 56 88 68 50 37 117 110 77 19 44 120 78 105

0.161 0.250 0.116 0.070 0.050 0.034 0.032 0.087 0.012 0.007 0.006 0.013 0.018 0.006 0.026 0.007 0.001 0.001 0.002 0.002 0.003 0.007 0.001 0.003 0.002 0.000 0.005 0.004 0.001 0.001 0.001 0.000 0.008 0.000 0.002 0.001 0.009 0.001 0.000 0.001 0.001 0.004 0.000 0.000 0.000 0.004 0.001 0.000 0.001 0.000

0.210 0.226 0.121 0.073 0.040 0.029 0.025 0.063 0.007 0.007 0.008 0.008 0.026 0.012 0.029 0.007 0.000 0.002 0.001 0.001 0.003 0.004 0.000 0.003 0.003 0.000 0.009 0.004 0.001 0.001 0.001 0.001 0.003 0.000 0.001 0.002 0.001 0.001 0.000 0.001 0.001 0.002 0.000 0.000 0.000 0.006 0.001 0.000 0.000 0.000

15 33 19 13 16 18 6 28 11 8 14 5 67 4 3 21 136 39 20 27 65 25 23 17 106 63 98 75 58 10 68 117 129 42 48 93 40 53 95 55 179 85 175 70 56 151 109 38 34 72

initial GDP/cap. 21213 12378 20148 21886 21046 20221 30704 17756 23909 27177 21608 32134 3632 33694 36318 19532 578 10129 20036 18017 3779 18243 18624 20276 1282 3871 1564 3020 4509 24044 3621 997 716 9043 7489 1744 10119 5314 1700 5064 194 2096 203 3496 5005 393 1250 10604 12319 3379

Notes: Columns 2, 5 report export and import shares for all firms, Columns 3, 6 for our estimation sample. Export, import ranks based on Columns 2, 5. Initial GDP/cap. is from 1996 (or first available subsequent year in 5 cases; see fn 21) from the World Development Indicators, in constant 2000 US dollars. Countries poorer than Portugal (in initial GDP/capita) appear in italics. Petroleum exports and imports excluded. Euro-zone countries included. Table continues on next two pages. Final row reports total exports for all destinations and total imports from all sources.

Table A1. (Continued) Summary statistics: exports, imports, initial income, 1997 export share

Macao Uruguay Bulgaria Iceland Zimbabwe Senegal Colombia Jordan Nigeria Pakistan Malta Malaysia Ghana Slovenia Philippines Kuwait Romania Lithuania Moldova Kenya Dominican Republic Ukraine Cote d’Ivoire Libya Syrian Arab Republic Croatia Guatemala Peru Estonia Vietnam Ethiopia Mauritius Latvia Paraguay Bahrain Sri Lanka Iran Netherlands Antilles El Salvador Armenia Malawi Jamaica Yemen Gabon Cameroon Tanzania Costa Rica Qatar Indonesia Honduras

import share

export rank

all exports

est. sample

import rank

all imports

est. sample

income rank

51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100

0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

97 90 57 39 30 85 71 93 63 23 100 25 73 70 86 136 96 58 92 74 125 33 36 84 51 122 72 99 101 75 136 35 106 118 126 109 81 46 98 136 55 124 102 48 24 61 76 136 32 69

0.000 0.000 0.001 0.001 0.001 0.000 0.003 0.000 0.001 0.003 0.000 0.003 0.000 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.001 0.001 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.001 0.002 0.001 0.001 0.000 0.001 0.000

0.000 0.000 0.001 0.002 0.003 0.000 0.001 0.000 0.001 0.004 0.000 0.003 0.000 0.000 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.002 0.002 0.000 0.001 0.000 0.001 0.000 0.000 0.000 . 0.002 0.000 0.000 0.000 0.000 0.000 0.001 0.000 . 0.001 0.000 0.000 0.001 0.003 0.001 0.000 0.000 0.003 0.001

29 50 103 9 131 146 80 94 153 137 43 64 168 45 122 26 91 78 158 149 82 134 133 51 112 60 96 89 62 156 183 73 79 102 37 128 100 35 88 141 182 66 143 57 135 165 69 7 124 114

initial GDP/cap. 14871 6708 1424 26594 662 440 2465 1706 368 527 8544 3865 238 8359 927 18233 1817 2705 319 422 2257 609 622 6511 1203 4296 1599 1983 4106 328 125 3191 2477 1460 11329 727 1486 12126 1986 497 150 3647 476 4647 582 252 3549 28793 878 1112

Table A1. (Continued) Summary statistics: exports, imports, initial income, 1997 export share

Kazakhstan Zambia Burkina Faso Bangladesh Madagascar Georgia Albania Togo Benin Dem. Rep. of Congo Rep. of Congo Mauritania Niger Uganda Rwanda Bolivia Nepal Burundi Gambia, The Belarus Swaziland Barbados Mali Sudan Central African Rep. Trinidad and Tobago Chad Haiti Aruba Suriname Equatorial Guinea Azerbaijan Bahamas Laos Lesotho Guyana Seychelles Belize Sierra Leone Fiji Macedonia Solomon Islands Botswana Grenada Dominica Papua New Guinea Total (bil. euros)

import share

export rank

all exports

est. sample

import rank

all imports

est. sample

income rank

101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

89 67 62 108 87 136 131 107 45 47 49 111 115 40 136 121 127 129 136 112 54 135 53 95 113 82 27 136 136 80 79 103 130 136 136 59 136 128 116 42 134 136 133 136 136 104

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.001 0.001 0.001 0.000 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.000

0.000 0.001 0.001 0.000 0.000 . 0.000 0.000 0.001 0.001 0.001 0.000 0.000 0.002 0.000 0.000 0.000 0.000 0.000 0.000 0.001 0.000 0.001 0.000 0.000 0.000 0.003 . . 0.000 0.000 0.000 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.002 0.000 . 0.000 . 0.000 0.000

116 157 178 162 166 139 118 164 159 186 115 145 181 171 173 119 174 185 160 120 110 44 172 161 170 54 180 144 24 90 126 142 30 163 150 123 52 76 177 86 97 104 77 74 71 127

22.18

14.86

30.76

11.03

initial GDP/cap. 1044 322 198 293 243 517 993 256 311 112 1051 441 168 228 213 968 206 113 307 949 1236 8523 217 303 232 5205 169 446 18548 1898 802 489 14765 279 406 885 6242 2865 202 2048 1589 1366 2726 3140 3479 793

Table A2. Summary statistics, baseline estimation sample, 1997-2005

sales number of output categories export share of sales share of exports to richer countries number of destination countries number of export categories avg. log income of destination purchases number of input categories import share of purchases share of imports from richer countries number of source countries number of import categories average log income of source

fraction exporter fraction importer N (firms)

1997

1998

1999

2000

2001

2002

2003

2004

2005

5.57 (0.51) 4.51 (0.07) 0.21 (0.00) 0.79 (0.01) 7.71 (0.15) 10.03 (0.28) 11.62 (0.05) 3.24 (0.43) 7.70 (0.08) 0.20 (0.00) 0.90 (0.00) 5.63 (0.08) 21.74 (0.65) 10.87 (0.03)

5.45 (0.44) 4.52 (0.07) 0.21 (0.00) 0.80 (0.01) 7.53 (0.14) 9.89 (0.26) 11.63 (0.05) 3.09 (0.35) 8.12 (0.08) 0.20 (0.00) 0.89 (0.00) 5.65 (0.08) 21.70 (0.64) 10.88 (0.03)

5.18 (0.45) 4.51 (0.06) 0.21 (0.00) 0.81 (0.01) 7.53 (0.14) 9.88 (0.26) 11.60 (0.05) 2.91 (0.36) 8.44 (0.08) 0.20 (0.00) 0.90 (0.00) 5.65 (0.08) 21.94 (0.61) 10.89 (0.03)

4.97 (0.46) 4.53 (0.06) 0.20 (0.00) 0.80 (0.01) 7.53 (0.14) 9.86 (0.25) 11.48 (0.05) 2.87 (0.43) 8.78 (0.08) 0.20 (0.00) 0.90 (0.00) 5.58 (0.08) 22.01 (0.59) 10.81 (0.03)

5.04 (0.50) 4.47 (0.06) 0.19 (0.00) 0.79 (0.01) 7.50 (0.15) 10.02 (0.27) 11.41 (0.04) 2.92 (0.42) 8.90 (0.08) 0.19 (0.00) 0.88 (0.00) 5.56 (0.08) 21.62 (0.59) 10.68 (0.03)

7.36 (0.67) 5.93 (0.17) 0.14 (0.01) 0.76 (0.01) 7.32 (0.33) 9.76 (0.72) 10.73 (0.07) 4.19 (0.37) 7.05 (0.14) 0.18 (0.01) 0.87 (0.01) 5.34 (0.18) 20.06 (1.19) 10.55 (0.06)

6.91 (0.61) 6.04 (0.17) 0.14 (0.01) 0.75 (0.01) 7.15 (0.30) 9.39 (0.61) 10.69 (0.06) 3.70 (0.32) 7.18 (0.14) 0.18 (0.01) 0.88 (0.01) 5.21 (0.17) 20.60 (1.51) 10.51 (0.05)

9.86 (0.79) 3.89 (0.09) 0.24 (0.01) 0.79 (0.01) 8.85 (0.27) 13.04 (0.56) 11.46 (0.07) 5.49 (0.55) 7.75 (0.15) 0.28 (0.01) 0.87 (0.01) 6.78 (0.14) 29.41 (1.28) 11.17 (0.06)

9.35 (0.70) 3.82 (0.09) 0.24 (0.01) 0.78 (0.01) 8.94 (0.27) 13.77 (0.59) 11.36 (0.07) 5.12 (0.47) 7.87 (0.15) 0.27 (0.01) 0.87 (0.01) 6.83 (0.14) 31.04 (1.33) 11.07 (0.06)

0.49 0.50 6585

0.49 0.52 6873

0.49 0.51 7194

0.47 0.49 7713

0.45 0.48 7994

0.45 0.45 2046

0.46 0.45 2160

0.59 0.60 2455

0.60 0.59 2639

Notes: Table reports averages across firms, weighting firms equally. Average income of sales destinations and purchase sources include the home market as possible destination or source, as described in Section 4 of the text. Sales and purchases are in millions of 2000 Euros, avg. incomes of destination and source in thousands of 2000 Euros.

Table A3. Source-country characteristics and import prices in cross section, 1997

(1) richer than Portugal

0.58*** (0.11)

dep. var.: firm-product log import price (2) (3) 0.33*** (0.10)

log GDP/cap. log GDP European Union landlocked log distance

product effects firm-product effects R2 N

(4)

0.08*** (0.02) -0.34*** (0.12) 0.20*** (0.06) 0.02 (0.05)

0.03 (0.02) -0.16 (0.13) 0.02 (0.07) 0.07 (0.06)

0.23*** (0.03) 0.06*** (0.02) -0.30*** (0.08) 0.14*** (0.04) -0.01 (0.03)

Y N 0.68 99365

N Y 0.94 99365

Y N 0.68 99365

0.13*** (0.03) 0.02 (0.02) -0.15 (0.10) -0.00 (0.06) 0.06 (0.05) N Y 0.94 99365

Notes: Sample is all firm-input-source observations in 1997 for firms in baseline estimation sample. Euro-zone origins included. “Richer than Portugal” defined using 1996 GDP/capita, consistent with our use of 1996 values elsewhere; log GDP/cap. variable is from 1997. Robust standard errors, clustered by source country, in parentheses.

Table A4. Destination characteristics in cross section, 1997, excluding Euro-zone

(1) richer than Portugal

0.092*** (0.032)

dep. var.: firm-product log export price (2) (3) 0.107*** (0.027)

log GDP/cap. log GDP European Union landlocked log distance

product effects firm-product effects R2 N

(4)

0.007 (0.004) 0.063** (0.026) -0.019 (0.039) 0.054*** (0.013)

0.001 (0.005) 0.028 (0.023) 0.030 (0.053) 0.042*** (0.008)

0.026** (0.011) 0.005 (0.005) 0.071*** (0.027) -0.048 (0.040) 0.055*** (0.014)

Y N 0.73 35438

N Y 0.94 35438

Y N 0.73 35438

0.033*** (0.010) -0.001 (0.006) 0.035 (0.025) 0.009 (0.062) 0.044*** (0.009) N Y 0.94 35438

Notes: Sample is firm-product-destination observations in 1997 for firms in estimation sample, excluding Euro-zone destinations. Results when including Euro-zone destinations are similar (see Table 3). “Richer than Portugal” defined using 1996 GDP/capita, consistent with our use of 1996 values elsewhere; log GDP/cap. variable is from 1997. Robust standard errors, clustered by destination, in parentheses.

Table A5. Sales response to real-exchange-rate movements, alternative specification

(1) log(RER)

0.370*** (0.049)

dep. var.: sinh−1 (sales) (2) (3) 0.489*** (0.048)

log(RER)*1(any exports in 1997)

0.356*** (0.082) 0.215** (0.101)

log(RER)*(sales share in 1997)

firm effects destination effects firm-destination effects year effects R2 N

(4) 0.403*** (0.050)

0.037*** (0.005) Y Y N Y 0.34 158762

Y Y 0.83 158762

Y Y 0.83 158762

Y Y 0.83 158762

Notes: Table similar to Table 4 but with inverse hyperbolic sine of firm’s sales (rather than firm’s sales share) as dependent variable. Robust standard errors, clustered at firm-year level, in parentheses.

Table A6. Export price and quantity response to real-exchange-rate movements dep. var.:

log(RERt ) log(RERt−1 ) log(RERt−2 ) log(RERt−3 )

firm-product-destination effects year effects product-year effects R2 N

log export quantity (1) (2)

log export price (3) (4)

0.373*** (0.080) 0.047 (0.072) -0.055 (0.058) 0.058 (0.061)

0.383*** (0.079) 0.025 (0.069) -0.046 (0.058) 0.051 (0.058)

0.085*** (0.025) 0.024 (0.025) 0.002 (0.021) -0.042 (0.026)

0.040* (0.023) 0.014 (0.024) 0.011 (0.024) -0.041* (0.022)

Y Y N 0.87 202243

Y N Y 0.89 202243

Y Y N 0.92 202243

Y N Y 0.93 202243

Notes: log real exchange rate (log(RER)) defined as in (20) in text. Observations are at the firm-destinationproduct-year level for firms in the estimation sample, excluding Euro-zone destinations. Robust standard errors, clustered at firm-year level, in parentheses.

Table A7. Examining role of intensive and extensive margins, OLS estimates dep. var.: firm-average log real input price (1) (2) (3) (4) 4 log avg. dest. gdp/cap. (intensive) 4 log avg. dest. gdp/cap. (extensive)

0.051** (0.022) 0.020 (0.016)

0.050** (0.022) 0.026 (0.017) -0.002 (0.002)

0.048** (0.022) 0.022 (0.018) -0.003 (0.003) 0.018 (0.030)

0.047** (0.022) 0.016 (0.018) -0.003 (0.003) 0.020 (0.030) 0.024*** (0.007)

Y Y Y 0.80 45635

Y Y Y 0.80 45635

Y Y Y 0.80 45635

Y Y Y 0.80 45635

log(1 + avg. dest. distance) export share of sales log sales

initial source interactions firm effects year effects R2 N

Notes: Table similar to Table 5, using baseline estimation sample. Variation over time in log average destination GDP/capita (intensive) reflects only changes in sales shares to continuing destinations. Variation in log average destination GDP/capita (extensive) reflects solely movements in sales shares associated with exit and entry in destinations. See footnote 34. Robust standard errors in parentheses.

Table A8. Linear probability model of export entry, IV estimates dep. var.: indicator for any exports richer than Portugal (1)

poorer than Portugal (2)

all destinations (3)

firm-avg log real input price

-0.013* (0.007)

0.002 (0.002)

-0.001 (0.002)

initial destination interactions firm effects destination-year effects N

Y Y Y 1552406

Y Y Y 5753034

Y Y Y 7305440

Notes: Data are at firm-destination-year level. Estimating equation is (27) in Section 5.2. Instruments are interactions of indicators for positive imports to source in 1997 and log real-exchange rates for Portugal’s top 100 non-Euro-zone export destinations. First-stage results are in Appendix Table B15. Robust standard errors, clustered at firm-year level, in parentheses.

Table A9. Destination income and firm average input prices, LIML estimates

(1) log avg. destination gdp/cap

dep. var.: firm-average log real input price (2) (3) (4) (5)

0.99*** (0.33)

0.90*** (0.32) -0.02*** (0.01)

1.18*** (0.44) -0.00 (0.00) -0.57** (0.23)

1.15*** (0.44) -0.00 (0.00) -0.56** (0.23) 0.02** (0.01)

1.39*** (0.49) 0.17* (0.09) -1.71** (0.70) 0.00 (0.01)

0.96** (0.48) 0.25** (0.12) -0.47 (0.68) -0.01 (0.02)

Y Y Y 45659 264.22 0.00 3.11 2.20 0.00

Y Y Y 45659 269.91 0.00 3.11 2.20 0.00

Y Y Y 45659 249.61 0.00 2.67 2.19 0.00

Y Y Y 45659 248.92 0.00 2.65 2.17 0.00

Y Y Y 45659 245.01 0.00 2.53 2.17 0.00

Y Y Y 45659 232.20 0.00 2.32 2.18 0.00

log(1+avg dest. distance) export share of sales log sales

initial source interactions firm effects year effects N Kleibergen-Paap LM statistic (under-identification) Kleibergen-Paap LM p-value Kleibergen-Paap Wald rk F-stat (weak insts.) Anderson-Rubin Wald test F-stat Anderson-Rubin Wald test p-value

(6)

Notes: Table presents limited-information maximum likelihood (LIML) estimates of equation (23) in text. Instruments are interactions of indicators for positive exports to destination in 1997 and log real-exchange rate for Portugal’s top 100 non-Euro-zone export destinations. Initial source interactions, included directly as covariates, are defined analogously to the instruments, using indicators for initial imports. Columns 1 to 4 treat only log avg. destination GDP/cap as endogenous; Column 5 adds log(1 + avg. destination distance), and Column 6 adds export share of sales to endogenous set. Destination gdp/cap measured in 1996. Robust standard errors in parentheses.

Table A10. Reduced form, income-group instruments dep. var.: firm-average log real input price

log(RERit ), inc. ranks 1-10 log(RERit ), inc. ranks 11-20 log(RERit ), inc. ranks 21-30 log(RERit ), inc. ranks 31-40 log(RERit ), inc. ranks 41-50 log(RERit ), inc. ranks 51-60 log(RERit ), inc. ranks 61-70 log(RERit ), inc. ranks 71-80 log(RERit ), inc. ranks 81-90 log(RERit ), inc. ranks 91-100 log(RERit ), inc. ranks 101-110 log(RERit ), inc. ranks 111-120 log(RERit ), inc. ranks 121-130 log(RERit ), inc. ranks 131-140 log(RERit ), inc. ranks 141-150 log(RERit ), inc. ranks 151+ log(1+avg dest. distance) export share of sales log sales

(1)

(2)

(3)

(4)

(5)

(6)

0.139** (0.061) 0.118 (0.080) 0.059 (0.053) -0.052 (0.070) 0.009 (0.037) -0.038 (0.045) 0.051* (0.031) -0.011 (0.043) -0.025 (0.081) -0.068** (0.027) -0.029 (0.073) -0.195 (0.125) 0.150 (0.116) 0.022 (0.016) -0.539* (0.287) -0.028 (0.040)

0.139** (0.061) 0.118 (0.080) 0.060 (0.053) -0.053 (0.070) 0.010 (0.037) -0.038 (0.045) 0.052* (0.031) -0.011 (0.043) -0.025 (0.081) -0.068** (0.027) -0.028 (0.073) -0.194 (0.125) 0.150 (0.116) 0.023 (0.016) -0.541* (0.287) -0.027 (0.040) -0.002 (0.002)

0.138** (0.061) 0.119 (0.080) 0.060 (0.053) -0.053 (0.070) 0.009 (0.037) -0.038 (0.045) 0.052* (0.031) -0.011 (0.043) -0.025 (0.081) -0.068** (0.027) -0.029 (0.073) -0.188 (0.125) 0.149 (0.116) 0.023 (0.016) -0.542* (0.287) -0.026 (0.040) -0.004 (0.002) 0.035 (0.027)

0.140** (0.061) 0.121 (0.080) 0.061 (0.053) -0.053 (0.069) 0.011 (0.037) -0.041 (0.045) 0.052* (0.031) -0.009 (0.043) -0.022 (0.081) -0.069** (0.027) -0.024 (0.073) -0.188 (0.124) 0.141 (0.116) 0.024 (0.016) -0.538* (0.288) -0.026 (0.040) -0.004 (0.002) 0.034 (0.027) 0.024*** (0.007)

0.140** (0.061) 0.120 (0.080) 0.060 (0.053) -0.052 (0.069) 0.011 (0.037) -0.040 (0.045) 0.050 (0.031) -0.010 (0.043) -0.021 (0.081) -0.068** (0.027) -0.024 (0.073) -0.192 (0.124) 0.141 (0.116) 0.023 (0.016) -0.535* (0.287) -0.028 (0.040)

0.140** (0.061) 0.119 (0.080) 0.060 (0.053) -0.052 (0.069) 0.011 (0.037) -0.041 (0.045) 0.050 (0.031) -0.010 (0.043) -0.022 (0.081) -0.068** (0.027) -0.024 (0.073) -0.194 (0.124) 0.142 (0.116) 0.023 (0.016) -0.535* (0.287) -0.028 (0.040)

0.010 (0.023) 0.024*** (0.007)

0.024*** (0.007)

initial source interactions Y Y Y Y Y Y firm, year effects Y Y Y Y Y Y R2 0.80 0.80 0.80 0.80 0.80 0.80 N 45659 45659 45659 45659 45659 45659 F-stat (insts=0) 2.08 2.09 2.10 2.12 2.09 2.10 Notes: Table presents reduced-form estimates corresponding to the alternatve IV model described in Section 5.4 and reported in Table 8. Instruments are log weighted-average RERs at the country-income-group level, weighting by firm-level initial export shares to destination, as defined in equation (22). Euro-zone countries and countries outside of Portugal’s top 100 export destinations excluded when constructing instruments. Robust standard errors in parentheses.

Table A11. Excluding initial source interactions, OLS estimates dep. var.: firm-average log real input price (1) (2) (3) (4) log avg. destination gdp/cap

0.065*** (0.023)

0.073*** (0.024) -0.003 (0.002)

0.074*** (0.028) -0.003 (0.002) -0.003 (0.031)

0.069** (0.028) -0.003 (0.002) -0.002 (0.031) 0.024*** (0.007)

N Y Y 0.80 45659

N Y Y 0.80 45659

N Y Y 0.80 45659

N Y Y 0.80 45659

log(1+avg dest. distance) export share of sales log sales

initial source interactions firm effects year effects R2 N

Notes: Table is similar to Table 5 but excludes the initial source interactions (interactions of indicators for positive imports from origin in 1997 and log RER). Robust standard errors in parentheses.

Table A12. Excluding initial source interactions, IV estimates

(1) log avg. destination gdp/cap

dep. var.: firm-average log real input price (2) (3) (4) (5)

0.56*** (0.20)

0.52** (0.20) -0.01*** (0.00)

0.69*** (0.25) -0.00 (0.00) -0.32** (0.13)

0.67*** (0.25) -0.00 (0.00) -0.31** (0.13) 0.02*** (0.01)

0.70*** (0.25) 0.04* (0.02) -0.60*** (0.20) 0.02** (0.01)

0.65*** (0.25) 0.05** (0.02) -0.35 (0.30) 0.01* (0.01)

N Y Y 45659 285.04 0.00 3.30 2.36 0.00

N Y Y 45659 290.21 0.00 3.32 2.36 0.00

N Y Y 45659 282.69 0.00 3.08 2.35 0.00

N Y Y 45659 281.82 0.00 3.06 2.33 0.00

N Y Y 45659 314.75 0.00 3.53 2.32 0.00

N Y Y 45659 269.43 0.00 2.62 2.33 0.00

log(1+avg dest. distance) export share of sales log sales

initial source interactions firm effects year effects N Kleibergen-Paap LM statistic (under-identification) Kleibergen-Paap LM p-value Kleibergen-Paap Wald rk F-stat (weak insts.) Anderson-Rubin Wald test F-stat Anderson-Rubin Wald test p-value

(6)

Notes: Table is similar to Table 6 but excludes the initial source interactions (interactions of indicators for positive imports from origin in 1997 and log RER). First-stage results in Appendix Table B16. Robust standard errors in parentheses.

Table A13. Including current source interactions, OLS estimates

(1) log avg. destination gdp/cap

dep. var.: firm-average log real input price (2) (3) (4)

0.06*** (0.02)

0.07*** (0.02) -0.00 (0.00)

0.07** (0.03) -0.00 (0.00) -0.00 (0.03)

0.07** (0.03) -0.00 (0.00) -0.00 (0.03) 0.02*** (0.01)

Y Y Y 0.80 45659

Y Y Y 0.80 45659

Y Y Y 0.80 45659

Y Y Y 0.80 45659

log(1+avg dest. distance) export share of sales log sales

current source interactions firm effects year effects R2 N

Notes: Table is similar to Table 5 but includes current source interactions (interactions of indicators for positive imports from origin in current year and log real-exchange rate) instead of initial source interactions. Robust standard errors, clustered at destination-year level, in parentheses.

Table A14. Including current source interactions, IV estimates

(1) log avg. destination gdp/cap

dep. var.: firm-average log real input price (2) (3) (4) (5)

0.58*** (0.21)

0.54*** (0.21) -0.01*** (0.00)

0.74*** (0.26) -0.00 (0.00) -0.35** (0.14)

0.73*** (0.26) -0.00 (0.00) -0.34** (0.14) 0.02*** (0.01)

0.78*** (0.26) 0.04* (0.02) -0.63*** (0.21) 0.02** (0.01)

0.75*** (0.26) 0.05* (0.02) -0.47 (0.30) 0.01** (0.01)

Y Y Y 45659 267.66 0.00 3.05 2.27 0.00

Y Y Y 45659 275.89 0.00 3.13 2.28 0.00

Y Y Y 45659 261.81 0.00 2.71 2.27 0.00

Y Y Y 45659 259.87 0.00 2.68 2.26 0.00

Y Y Y 45659 305.43 0.00 3.20 2.26 0.00

Y Y Y 45659 278.77 0.00 2.64 2.27 0.00

log(1+avg dest. distance) export share of sales log sales

current source interactions firm effects year effects N Kleibergen-Paap LM statistic (under-identification) Kleibergen-Paap LM p-value Kleibergen-Paap Wald rk F-stat (weak insts.) Anderson-Rubin Wald test F-stat Anderson-Rubin Wald test p-value

(6)

Notes: Table is similar to Table 6 but includes current source interactions (interactions of indicators for positive imports from origin in current year and log real-exchange rate) instead of initial source interactions. First-stage results in Appendix Table B17. Robust standard errors in parentheses.

Table A15. Excluding richest destinations from instrument set, IV estimates dep. var.: firm-average log real input price 5 dest. (1) log avg. destination gdp/cap log(1+avg dest. distance) export share of sales log sales

initial source interactions firm effects year effects N Kleibergen-Paap LM statistic (under-identification) Kleibergen-Paap LM p-value Kleibergen-Paap Wald rk F-stat (weak insts.) Anderson-Rubin Wald test F-stat Anderson-Rubin Wald test p-value

excluding from instrument set the richest 10 dest. 15 dest. 20 dest. (2) (3) (4)

25 dest. (5)

0.65** (0.26) 0.06** (0.03) -0.29 (0.31) 0.01 (0.01)

0.77*** (0.27) 0.07*** (0.03) -0.13 (0.32) 0.01 (0.01)

0.69** (0.27) 0.06** (0.03) -0.01 (0.33) 0.01 (0.01)

0.69*** (0.26) 0.05** (0.03) -0.15 (0.33) 0.01 (0.01)

0.58** (0.29) 0.05* (0.03) -0.14 (0.34) 0.01 (0.01)

Y Y Y 45659 239.67 0.00 2.51 2.28 0.00

Y Y Y 45659 161.92 0.00 1.96 2.34 0.00

Y Y Y 45659 162.20 0.00 2.04 2.37 0.00

Y Y Y 45659 148.72 0.00 1.92 2.24 0.00

Y Y Y 45659 139.61 0.00 2.00 2.16 0.00

Notes: Specifications are similar to Table 6 Column 6, but excluding subsets of the richest destinations from instrument set. Column 1 excludes the 5 richest non-Euro-zone countries, leaving the other 95 destinations in the instrument set, and similarly for the other columns. First-stage results in Appendix Tables B5-B9. Robust standard errors in parentheses.

Table A16. Excluding poorest destinations from instrument set, IV estimates dep. var.: firm-average log real input price 5 dest. (1) log avg. destination gdp/cap log(1+avg dest. distance) export share of sales log sales

initial source interactions firm effects year effects N Kleibergen-Paap LM statistic (under-identification) Kleibergen-Paap LM p-value Kleibergen-Paap Wald rk F-stat (weak insts.) Anderson-Rubin Wald test F-stat Anderson-Rubin Wald test p-value

excluding from instrument set the poorest 10 dest. 15 dest. 20 dest. (2) (3) (4)

25 dest. (5)

0.69** (0.27) 0.06** (0.03) -0.25 (0.32) 0.01 (0.01)

0.66** (0.27) 0.05* (0.03) -0.26 (0.33) 0.01 (0.01)

0.67** (0.27) 0.06* (0.03) -0.23 (0.34) 0.01 (0.01)

0.63** (0.27) 0.06* (0.03) -0.18 (0.34) 0.01 (0.01)

0.54* (0.28) 0.05* (0.03) -0.12 (0.35) 0.01* (0.01)

Y Y Y 45659 224.77 0.00 2.41 2.20 0.00

Y Y Y 45659 212.81 0.00 2.41 2.26 0.00

Y Y Y 45659 208.93 0.00 2.50 2.30 0.00

Y Y Y 45659 204.56 0.00 2.64 2.35 0.00

Y Y Y 45659 202.84 0.00 2.80 2.43 0.00

Notes: Specifications are similar to Table 6 Column 6, but excluding subsets of the poorest destinations from instrument set. Column 1 excludes the 5 poorest non-Euro-zone countries, leaving the other 95 destinations in the instrument set, and similarly for the other columns. First-stage results in Appendix Tables B10-B14. Robust standard errors in parentheses.

Table A17. Destination income and firm average input prices, two-step feasible EGMM estimates

(1) log avg. destination gdp/cap

dep. var.: firm-average log real input price (2) (3) (4) (5)

0.41** (0.17)

0.37** (0.17) -0.01** (0.00)

0.44** (0.21) -0.00 (0.00) -0.19* (0.11)

0.42** (0.21) -0.00 (0.00) -0.18 (0.11) 0.02*** (0.01)

0.47** (0.21) 0.03 (0.02) -0.40** (0.19) 0.02*** (0.01)

0.42* (0.22) 0.04 (0.02) -0.14 (0.27) 0.02** (0.01)

Y Y Y 45659 264.22 0.00 3.11 2.20 0.00

Y Y Y 45659 269.91 0.00 3.11 2.20 0.00

Y Y Y 45659 249.61 0.00 2.67 2.19 0.00

Y Y Y 45659 248.92 0.00 2.65 2.17 0.00

Y Y Y 45659 245.01 0.00 2.53 2.17 0.00

Y Y Y 45659 232.20 0.00 2.32 2.18 0.00

log(1+avg dest. distance) export share of sales log sales

initial source interactions firm effects year effects N Kleibergen-Paap LM statistic (under-identification) Kleibergen-Paap LM p-value Kleibergen-Paap Wald rk F-stat (weak insts.) Anderson-Rubin Wald test F-stat Anderson-Rubin Wald test p-value

(6)

Notes: Table reports estimates of equation (23) in text, using a two-step feasible efficient GMM estimator. Specifications are similar to those in Table 6. Robust standard errors in parentheses.