Factors determining the success or failure of Canadian establishments
on foreign markets: A survival analysis approach
by John Bosco Sabuhoro and Yvan Gervais
Business and Trade Statistics Field
Analytical Studies Branch research paper series, No. 220
Context
Canada relies on trade to create jobs and growth more than another
industrialized country (Team Canada Inc Business Plan). Canada is a
relatively open economy, which needs access to the global marketplace
to thrive. Understanding the factors associated with the success of
failure of Canadian exporters on foreign markets is needed to meet the
challenges of increasing the number of exporters, broadening Canada’s
export product range and exporting beyond the U.S. market.
On the other side, the openness of the Canadian economy makes it vulnerable
to monetary and financial crises happening in the rest of the world
(e.g. the Pacific Rim at the end of the 1990’s). So, the export
market characteristics matter when one analyses the success or failure
of the Canadian exporter.
Objectives
The purpose of the paper is to identify and to quantify the impact
of factors conditioning the survival time of Canadian exporters. The
study will investigate the role of establishment and industry characteristics,
export market characteristics, market structure, product characteristics
and business cycling in modeling the success or failure of Canadian
exporters.
Findings
The study found that one-third of establishments export for one month
only. The probability of exit before 12 months is 42.2% and the median
survival time is 20 months. The hazard of exit is found to vary negatively
with the relative size of the establishment, number of exported products
and destinations and the proportion of new entries into export episodes.
Establishments exporting to the U.S Eastern Seaboard face a lower risk
of exit than establishments exporting to other U.S. regions and any
other destinations. Also, hazard rates vary across provinces of residence
and host industry.
Data sources: 1993-2000 Exporter Registry
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the full publication.
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