Importing after exporting

Non Technical Summary

This paper studies how firms’ experience in export markets can help them become better importers. Exporting and importing are often treated as separate activities: exporters sell goods abroad, while importers source inputs, machinery, components, or materials from foreign suppliers. Yet many firms do both, and the way these activities interact matters for trade policy, industrial development, and productivity growth.

Using detailed customs data covering the universe of Argentine firms’ export and import transactions, the paper documents a clear pattern: when a firm starts exporting to a new country, it becomes more likely to start importing from that same country in the following year. This is not simply because larger or more productive firms tend to trade more in general. The effect is specific to the country where the firm gained export experience. In other words, exporting to a new market makes a firm more likely to source from that same market later, rather than simply increasing imports from everywhere.

The paper argues that the main reason is learning. Entering a foreign market as an exporter exposes firms to local business networks, logistics providers, intermediaries, regulations, standards, and commercial practices. It also gives firms opportunities to identify reliable suppliers, understand input quality, and learn how to manage transactions in that country. This market-specific knowledge reduces the cost and uncertainty of importing from the same place later on.

This mechanism is important because importing is not a simple transaction. Firms need to find suitable suppliers, assess quality, negotiate contracts, manage customs procedures, comply with regulations, and organize transport and payments. These tasks are especially difficult when inputs are differentiated, technologically complex, rarely imported, or sourced from distant and unfamiliar markets. The paper finds that the effect of export experience is stronger precisely in these cases, supporting the idea that exporting helps firms overcome information and search barriers.

A key contribution of the paper is to distinguish this learning mechanism from other explanations. One possibility is that firms import after exporting simply because exporting makes them larger or more productive. But if this were the main explanation, export entry into one market should increase imports from many markets. The evidence does not support this. Another possibility is that exporting and importing share operational costs only when both activities happen at the same time. However, the paper shows that firms may start importing from a market even after they stop exporting there. This suggests that what matters is not only simultaneous cost sharing, but the lasting knowledge acquired through export experience.

The paper also quantifies the size of the effect. The estimates imply that export entry reduces the fixed cost of importing from the same market by about 15 percent. For the median firm, the estimated fixed cost of starting to import from a country falls from around US$110,800 without prior export experience to around US$94,000 after exporting to that country. This is an economically meaningful reduction, especially for firms facing high barriers to finding and establishing relationships with foreign suppliers.

The findings have important policy implications. Export promotion policies are often justified because they help firms reach new customers abroad. This paper suggests that they may also help firms improve their sourcing strategies. By entering new export markets, firms acquire knowledge that can later help them access better, cheaper, or more suitable foreign inputs. Since imported inputs can raise productivity, quality, and competitiveness, the benefits of export promotion may extend beyond export sales alone.

More broadly, the paper shows that internationalisation is a cumulative process. Exporting is not only a way to sell abroad; it can also be a way to learn about foreign suppliers. Policies that help firms enter new markets may therefore generate wider gains by improving their access to global supply chains.