Empirical evidence shows that zeros in a bilateral export matrix are very common and
non-zeros are extremely concentrated across destinations. According to the simple version of
Melitz (2003) model, variations in market size, as well as variable and fixed trade costs
across destinations are potential candidates for explaining the stylized facts on the incidence
of zeros and non-zeros in a trade matrix. Using Korean disaggregate export data (HS 10-
digit level), this paper finds that export participation depends on destination-specific factors
such as destination income, distance, local distribution cost, and fixed entry costs associated
with the destination language, institution, and information. In line with this theory, the
empirical findings suggest that destination-specific factors are important for shaping the
country’s export entries.