Exporter Dynamics, Firm Size and Growth, and Partial Year Effects adjusting for partial year effects. Our focus on continuing exporters matches that of the empirical literature on exporter dynamics that explores the growth pattern of surviving exporters.<sup>14</sup> To conduct the exercise we first select a sample of firms with enough data to be able to compare the levels of exports in the initial three years after export entry to export levels in subsequent (nonexit) years. Similarly we examine exports in the final three years of exporting. The sample includes all firms who export for at least four years and have just one change in their export status (entry or exit but not both) for measures of calendar year exports and exports adjusted for the initial month.<sup>15</sup> These criteria mean that firms with gaps in their annual exports (by either method) are excluded, as are all firms who export for brief spells, defined as fewer than 4 consecutive years. The number of firms in the sample is reduced from the overall population of Peruvian exporters because many firms enter and then exit, a large number of firms in the data enter after 2005, and a smaller number of firms have multiple spells of exporting with a gap of at least one calendar year. After limiting our sample in this manner we are left with 2352 firms and 10,580 firm export-years.

For the sample of “continuing” exports we estimate the following regression, where _lnYit_ is the log exports of firm _i_ in year _t_ , _δi,t_<sup>_entry_</sup> _−n_<sup>isanindicatorthatequalsoneiffirm</sup><sup>_i_</sup> started exporting in year _t − n_ , i.e. _Yi,t−n−_ 1 = 0, _Yi,t−n >_ 0, and _δi,t_<sup>_exit_</sup> + _x_<sup>isanindicatorthatequals</sup> one if the firm stopped exporting in year _t_ + _x_ , i.e. _Yi,t_ + _x−_ 1 _>_ 0, _Yi,t_ + _x_ = 0. The regression is run on the same set of firms, once using the raw calendar year data and once using the data adjusted for the initial export month. Standard errors are clustered at the firm level.<sup>16</sup> Table 2 reports coefficients on dummy variables for the first, second and third year of exporting and the last, second to last, and third to last year of exporting. Firm and year fixed effects are included so all coefficients give log levels relative to average firm exports in years outside the first three and last three.

Figure 4 shows the average within-firm deviations in percentages for new exporters in their first three years and exiting exporters in the last three years. The baseline is the within-firm average over the period of active exporting. The red series of circles is calculated from the raw data without any partial year corrections. These numbers correspond to the often-reported facts about exiting and especially entering exporters. New exporters are small at entry, 75 percent below their within sample average. However within several years most of the difference is erased, in their third year of exporting these firms are just 22 percent below their average. Similarly firms contract in the years

> 14We also estimate levels and growth rates for exiting firms in their last years in the market.

> 15It is important to make sure there are no 12 months gaps in either the annual calendar data or the data adjusted for initial months as no gaps in one series does not necessarily mean no gaps in the other.

> 16This specification means that we lose several years of data at the beginning and end of the sample period so that all the dummies are correctly specified for every firm.

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