Agglomeration and its mechanisms on exporting directly

This paper investigates the effects of agglomeration on manufacturing firms' export mode decision-making. A detailed firm-level dataset combines the manufacturing and product-level transaction trade data from China. We use a dynamic multinomial logit model with random effects to analyze the effects of agglomeration on the transition probabilities of firms' exporting mode. The results indicate that the agglomeration of direct exporters positively affect firm's choice of exporting directly, and further indicate that the agglomeration effect is identified through productivity spillover. Moreover, these effects are not destination-specific, but are industry-specific.