are expected to be better suited to take risks in foreign markets and, as a result, have a higher likelihood to become exporters and to have higher export intensity. Smith et al. (2002) found that the coefficient for publicly listed companies was positively and significantly related with both the export propensity and the export intensity of Danish firms.

Foreign-owned companies are also expected to be more likely to export than domestic-owned enterprises, because they have greater access to networking with foreign markets. Ramstetter (1999) found that foreing-owned firms in Indonesia have a higher share of their output exported in comparison with domestically-owned firms. Roper and Love (2002) and Cassiman and Martinez-Ros (2003) also found this relationship for the Irish and the Spanish manufacturing sectors, respectively. Their findings show that foreign-owned firms are much more likely to export and to export larger shares of their total sales than domestically-owned companies.

According to Roberts and Tybout (1997), foreign networks decrease the firm’s cost for collecting information on new markets. There are several channels through which foreign networks can develop, including imports. Thus, imports might be one determinant of exporting propensity. Sjoholm (2003), using imports of intermediate products as one of his proxies for foreign networks, found that this variable has a positive and significant coefficient in an Indonesian firm’s probability to start exporting. In addition, Pant (1993) and Dholakia and Kapur (1999, 2004) found a positive and significant relationship between import intensity and export intensity for Indian firms, using a dataset of 557 firms for 1991-92 and 1995-96, respectively. They concluded that the liberalization of imports was itself an export-promoting factor in India.

# **3. Descriptive Analysis**

The Investment Climate Survey (ICS) for Ecuador sampled 441 firms in 2003 of which 134 firms (30.4 percent) exported in 2002. Table 1 compares exporters with nonexporters in terms of region, industry, and size.<sup>12</sup> With respect to region, most firms (around 60 percent) in Manabi exported in 2002, while a small share of enterprises (5 percent) located in Tungurahua sold their products to foreign markets in that year. In the three other regions, exporters responded by 42 percent (Azuay), 31 percent (Pichincha), and 28 percent (Guayas) of total regional firms in 2002. When sampled firms are grouped by industry, it is interesting to notice that, in every category, at least 25 percent of firms exported in 2002.<sup>13</sup> Another interesting information is that the larger the size category, the higher the share of 2002 exporters.

> 12 Regions: (i) Tungurahua; (ii) Azuay; (iii) Guayas; (iv) Manabi; and, (v) Pichincha. Industry categories:

> (i) oil-derived products; (ii) food and beverages; (iii) apparel, textiles and leather; (iv) wood and furniture; (v) chemical products; and, (vi) metallic products.

> 13 Considering the share of medium- and high-technology products in Ecuador’s total exports, it increased from 0.7 percent in 1990 to 5.2 percent in 2001. In Latin America as a whole, this share increased from 8.9 percent in 1990 to 17.0 percent in 2001.

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