I. Using Functions of Innovation Systems to Understand the Successful Emergence of Non-traditional Agricultural Export Industries in Developing Countries: Cases from Ethiopia and Chile
Michiko Iizuka and Mulu Gebreeyesus
Development of new export industries provides an important stimulus for economic growth and structural transformation in developing countries. In any country, numerous new export industries, whether initiated by the government or private sector, are always being pursued, but only a few become successful due to inherent uncertainties in new activities. In this paper, we adopted the functions of innovation systems framework to understand the process of system building through examination of the successful emergence of two non-traditional agricultural export industries in developing countries, namely the Ethiopian flower industry and the Chilean salmon industry to identify effective policy measures in the early phases of development.
II. Learning to export and learning from exporting: The case of Ethiopian Manufacturing
Eyerusalem Siba, Mulu Gebreeyesus
In this study, we use a long panel dataset of Ethiopian manufacturing firms for the period 1996-2009 to test certain hypotheses regarding firm performance and exporting, namely export hysteresis, self-selection, and learning-by-exporting. We find evidence for export hysteresis and the presence of high sunk costs associated with exporting. However, the magnitude of this effect has become lower when controlling for unobserved firm heterogeneity using a dynamic random effect probit model suggesting that not addressing the unobserved heterogeneity can lead to an overestimation of the coefficient of the sunk costs. Moreover, we find no evidence of self-selection into exporting when controlling unobserved firm heterogeneity and unlike to most previous studies. On the other hand, we find strong robust evidence in support of the learning-by-exporting. Our results support the view that export promotion efforts might have long-term effects in terms of sustaining exports and industrial competitiveness.