Why Some Firms Export

This paper examines the factors that increase the probability of entry into exporting. Using a panel of U.S. manufacturing plants, we test for the role of plant characteristics, spillovers from neighboring exporters, entry costs, and government export promotion expenditures. Entry and exit in the export market by U.S. plants is substantial, past exporters are apt to reenter, and plants are likely to export in consecutive years. However, we find that entry costs are significant and spillovers from the export activity of other plants are negligible. State export promotion expenditures have no significant effect on the probability of exporting. Plant characteristics, especially those indicative of past success, strongly increase the probability of exporting, as does changing industries. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.