Industry Differences in the Effect of Export Market Entry: Learning by Exporting?

An extensive evidence base affirms the importance of sunk costs and firm heterogeneity to exporting. Only higher productivity firms can profitably cover sunk costs and enter export markets. This is the standard explanation for the regularity with which econometric analyses report that exporters are more productive than non-exporters. But what happens to their productivity trajectory once they have entered? Some theory points to the possibility of a further productivity boost, attributable to the effects of learning and competition. We investigate whether this is because the potential for a post-entry boost depends upon how exposed to competition the firm is. We find that industry differences are an important marker for determining whether learning effects boost productivity after export market entry.