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Risk Sharing Networks in Rural Philippines

Abstract

This paper tests two alternative models of selection into export: lower costs and better market familiarity. Both are potentially subject to learning-by-doing, but di¤er in the type of experience required. Learning to produce at lower cost -what we call productivity learning -depends on general experience, while learning to design products that appeal to foreign consumers -market learningdepends on export experience. Using panel and cross-section data on Moroccan manufacturers, we uncover evidence of market learning but little evidence that productivity learning is what enables …rms to export. These …ndings are consistent with the concentration of Moroccan manufacturing exports in consumer items, i.e., the garment, textile, and leather sectors. It is the young …rms that export. Most do so immediately after creation. We also …nd that, among exporters, new products are exported very rapidly after production has begun. The share of exported output nevertheless increases for 2-3 years after a new product is introduced, which is indicative of some learning. Old …rms are unlikely to switch to exports, even in response to changes in macro incentives.