Why temporary exporting can be optimal

Gábor Békés and Balázs Muraközy explain at the VoxEu blog why trade relationships often last for a surprisingly short period of time. Previously this was explained by failed export efforts. Instead, this column shows that it may be optimal for firms to export a certain product to a country only every once in a while. This requires less investment at the beginning and this strategy is often used by firms which are less productive or face credit constraints; this is especially true for farther and smaller markets.