The Dynamics of Expansion to Emerging Markets: Evidence from Canadian Exporters

This study investigates the expansion patterns of Canadian firms towards emerging markets. A unique large‐scale longitudinal (1997–2004) dataset which includes 2600 Canadian exporters is constructed by linking multiple administrative databases at Statistics Canada. Our results suggest traditional sequential exporting patterns do not apply to all Canadian exporters. Since 2001, there has been an increasing trend among a new generation of exporters to target emerging markets as their initial export destination; and both macroeconomic and firm‐specific factors seem to account for this development. Compared with foreign‐controlled firms, Canadian‐controlled firms are less likely to export to the emerging markets. In order to successfully expand into emerging markets, Canadian firms have had to improve their productivity and reduce their labor costs.