Exports, sunk costs and financial restrictions in Argentina during the 1990s

Abstract

This paper examines firms' export decisions in Argentina during the 1990s. Using a sample of 1600 Argentine industrial firms with information for the years 1992, 1996, 1998 and 2001, we test which factors affect the probability of entering foreign markets. We focus on the role of sunk costs and the access to financial markets as key determinants of firms' export decisions. The estimation of a non-linear binary variable model using export prior experience and explicit sunk costs variables confirms self-selection hypothesis on export markets participation. Results also suggest that firm-specific characteristics are significant to explain export decisions, particularly firm's access to the financial system

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