Impact of political instability on firm-level export decisions

In this paper, I use South Asian firm-level data to examine the effect of political instability on firm-level decisions to enter the foreign market. This is the first micro-level study in the international trade literature to examine the relationship between political instability and the firm-level export decision. This study uses the IV probit model to analyze the repeated cross-sectional data collected by the World Bank. I estimate various specifications to show that political instability is closely related to firm-level decisions to enter the market. The results confirm that political instability increases the probability that a firm enters the foreign market.