The objective of this paper is to perform an empirical description and analysis of the duration of EU imports from the rest of the world. Toward this aim, we employ a rich data set of detailed imports to individual EU-15 countries from 140 non-EU exporters, covering the period 1962–2006. Using these data, we both perform a thorough descriptive analysis of the duration of EU trade, and test the data in a regression analysis, using discrete-time duration models with proper controls for unobserved heterogeneity. Some interesting empirical findings emerge in our analysis. First, we find that EU imports from the rest of the world are very short-lived. The median duration of EU imports is merely 1 year. Moreover, almost 60% of all spells cease during the first year of service, and less than 10% survive the first 10 years. Second, we find that short duration is a persistent characteristic of trade throughout the extended time period that we study. Third, we find a set of statistically significant determinants of the duration of trade. Among the more interesting determinants is export diversification, which—both in terms of the number of products exported and the number of markets served with the given product—substantially lowers the hazard of trade flows dying. For instance, exporting a particular product to ten rather than one EU markets increases the probability of surviving the first year of trade in any given trade relationship by as much as 31 percentage points (from 33 to 64%).
Hess, Wolfgang and Maria Persson (2011),
"Exploring the Duration of EU Imports".
Review of World Economics