Portuguese exports during the great recession: regional heterogeneity in export responses to domestic demand shocks

This paper examines firms’ export adjustment during a period of sharp domestic demand contraction. Using Portuguese firm‑level data for the tradable manufacturing and services sectors across the five mainland regions during the sovereign‑debt crisis (2010–2013), we analyse how exports are associated with domestic demand conditions, firm characteristics, pricing behaviour, and regional heterogeneity. Our results show that adverse domestic demand conditions are systematically associated with higher export activity, operating through both export expansion among continuing exporters and entry into foreign markets. Productivity and firm size strongly condition export performance and export entry, while firms with lower markups tend to export more, even after controlling for productivity and demand conditions. The role of pricing behaviour during the crisis varies across regions, suggesting heterogeneous export‑adjustment patterns following a common national shock. Overall, the paper documents reduced-form relationships consistent with survival-driven reallocation, productivity‑based sorting, and regional differences in pricing-related export adjustment.