Importing after exporting

Abstract

In this paper, we uncover a novel fact about the relationship between exporting and importing. Using a comprehensive database of Argentine rms, we nd that exporting to a new destination increases the probability of a rm beginning to import from that market within the lapse of one year. We develop a standard model of import behavior and, by testing its predictions, we rule out productivity as an explanation and argue that export entry reduces import xed costs. We show that the e ect is stronger in distant markets and when importing involves non-homogenous and rarely imported goods. Taken together, our results suggest that rms gain knowledge on -or establish links with- potential suppliers after export entry, which reduces the costs associated with searching for import sources.