The Korean Economic Review
The Choice of Export Destinations and Its Determinants: Evidence from Korean Exports
Kichun Kang (Yeungnam University)Year 2013Vol. 29No. 1
Empirical evidence shows that zeros in a bilateral export matrix are very common andnon-zeros are extremely concentrated across destinations. According to the simple version ofMelitz (2003) model, variations in market size, as well as variable and fixed trade costsacross destinations are potential candidates for explaining the stylized facts on the incidenceof zeros and non-zeros in a trade matrix. Using Korean disaggregate export data (HS 10-digit level), this paper finds that export participation depends on destination-specific factorssuch as destination income, distance, local distribution cost, and fixed entry costs associatedwith the destination language, institution, and information. In line with this theory, theempirical findings suggest that destination-specific factors are important for shaping thecountry’s export entries.