enter foreign markets have been incurred, firms have an incentive to increase the intensity of their exports in order to decrease unitary sunk costs and, thus, if they increase capacity utilization, they would increase the share of products sold internationally.

Trade orientation variables show that firms whose first, second or third main trade partner is the U.S. are likely to have higher export intensities. The rationale behind the positive and significant coefficient for _Main U.S._ is that this country is a large and stable economy and, thus, mimes a reference on international trade. The FTA between Ecuador and the U.S., therefore, would open Ecuador’s borders to the global market and positively affect exporters that already trade with the U.S. and those to whom the U.S. might become one of their three main trade partners. On the other hand, exporters whose first, second or third main trade partners belong to the Andean Community, a trade bloc Ecuador joined in 1993, are likely to have lower export intensities. We believe that the negative and significant coefficient for _Main Andean Community_ is due to the smaller size of this market (in comparison to the American market, for example) and to the fact that the bloc is getting less open since its establishment. Thus, it leads us to consider the occurrence of trade diversion within the Andean Community: imports from more efficient producers are substituted by imports from less efficient producers due to decreases in trade tariffs among countries that belong to the bloc.

Results for infrastructure are not straightforward. None of the infrastructure variables considered were statistically significant. Our interpretation is that, even though there are infrastructure problems in Ecuador, on average, firms do not face interruptions in these services very frequently (as an annual share). Thus, this would significantly affect neither export propensities nor export intensities. These results are different from the ones found by Dollar et al. (2003) in their study on Chinese firms.

The remaining variables suggested by the theory are not significant in explaining either export propensity or export intensity of Ecuadorian firms.<sup>42</sup>

# **6. CONCLUSIONS**

What enables Ecuadorian manufacturing firms to start exporting? And what are the determinants of the share of total sales exported by a firm, once the decision of becoming an exporter has been made? The aggregated trade flows between countries have been extensively studied, but the micro-determinants of international trade have been less explored. This paper applied a Heckman selection model to the 2003Investment Climate Survey (ICS) dataset to evaluate the supply-side constraints to export performance at the firm-level in Ecuador, replicating most of the results in the literature. It estimated both the probability of a firm to become an exporter (export propensity) and the share of total sales that it exports (export intensity). Results were robust and stable, which means that they were (for the core variables), with one exception ( _Imported inputs_ ), similar in the four different estimations.

> 42 Remaining variables are: _Age_ , _Listed company_ , _Customs_ , and _Innovation_ .

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