Exports and Productivity Growth: First Evidence from a Continuous Treatment Approach

A recent survey of 54 micro-econometric studies reveals that exporting firms are more productive than non-exporters. However, previous empirical studies show that exporting does not necessarily improve productivity. One possible reason for this result is that most previous studies are restricted to analysing the relationship between a firm’s export status and the growth of its labour productivity, using the firms’ export status as a binary treatment variable and comparing the performance of exporting and non-exporting firms. In this paper, we apply the newly developed generalised propensity score (GPS) methodology that allows for continuous treatment, that is, different levels of the firms’ export activities. Using the GPS method and a large panel data set for German manufacturing firms, we estimate the relationship between a firm’s export-sales ratio and its labour productivity growth rate. We find that there is a causal effect of firms’ export activities on labour productivity growth. However, exporting improves labour productivity growth only within a sub-interval of the range of firms’ export-sales ratios. JEL no.  F14, F23, L60     

The U-Shaped Productivity Dynamics of French Exporters

We use data on French manufacturing firms to reveal that the productivity dynamics of new exporters is typically U-shaped. Prior to entry, firm productivity temporarily decreases, then recovers contemporaneously with entry, as the benefits from sales to foreign markets accrue. We show that the U-shaped pattern is more pronounced for intensively exporting firms and for firms operating in capital-intensive or high-technology sectors. This finding suggests that firms prepare to become exporters through prior specific investments and learning-to-export mechanisms. We then point to the limitations of studies that focus only on date of entry to exporting to discriminate between self-selection versus learning mechanisms. JEL no.  F10, F14, L60     

Exports versus FDI: An Empirical Test

In a recent paper Helpman, Melitz and Yeaple argue firm heterogeneity leads to self-selection in the structure of international commerce. Only the most productive firms find it profitable to meet the higher costs associated with FDI; the next set of firms finds it profitable to serve foreign markets through exporting; while the least productive firms serve only the domestic market. The paper tests this assumption using the concept of stochastic dominance. Robust support is found for the model, the productivity distribution of multinational firms is found to dominate that of export firms, which in turn dominates that of non-exporters. JEL no. D24, F14, F23     

Exports and success in German manufacturing

Exports and Success in German Manufacturing. - While Germany has a very open, export-oriented manufacturing sector, there has been little research on the role of exporting in German firms’ performance. This paper documents the significant differences between exporters and non-exporters and attempts to identify the sources of these disparities. Exporters are much larger, more capital-intensive, and more productive than non-exporters. However, the bulk of the evidence suggests that these performance characteristics predate the entry into export markets. The authors find no positive effects on employment, wage or productivity growth after entry. The authors’ results provide evidence that success leads to exporting rather than the reverse.     

Importers,Exporters and Multinationals: Exploring the Hierarchy of International Linkages

The purpose of this paper is to empirically explore two dimensions of the firm hierarchy of international market-specific linkages, using data on Swedish manufacturing firms from 1997 to 2007. First, we investigate the productivity ordering with respect to three international linkages; importing, exporting and investing abroad. Second, we explore whether differences in the productivity ordering across industries correlates with industry and country characteristics. Our findings support a general productivity hierarchy from importing to exporting and from exporting to investing abroad, as well as from a low to a high number of linkages (measuring the complexity of firms’ international linkages). However, an industry-by-industry examination shows that the hierarchical structure is only generally upheld when it comes to the number of international linkages, while the ordering of import, export and investment linkages does not exhibit the same regularity across industries. Extending the analysis, we find that the lack of a hierarchical structure is more likely in industries focusing on larger and less distant markets.     

The impact of exporting on firm productivity: a meta-analysis of the learning-by-exporting hypothesis

We conduct a meta-analysis of more than 30 papers that study the causal relationship between exporting and firm productivity. Our main result, robust to different specifications and to different weights for each observation, indicates that the impact of exporting upon productivity is higher for developing than developed economies. We also find that the export effect tends to be higher (1) in the first year that firms start exporting (compared to later years); and (2) when the sample used in the paper is not restricted to matched firms. Moreover, we find no evidence of publication bias.     

Higher wages in exporting firms: self-selection, export effect, or both? First evidence from linked employer-employee data

While it is a stylized fact that exporting firms pay higher wages than non-exporting firms, the direction of the link between exporting and wages is less clear. Using a rich set of German linked employer-employee panel data we follow over time plants that start to export. We show that the exporter wage premium does already exist in the years before firms start to export, and that it does not increase in the following years. Higher wages in exporting firms are thus due to self-selection of more productive, better paying firms into export markets; they are not caused by export activities.     

Is Exporting a Source of Productivity Spillovers?

This paper investigates whether exporting generates positive productivity spillover effects on other plants in the same industry and on plants in vertically related industries. Using data for Chilean manufacturing plants from 1990 to 1999, we find strong evidence that domestic as well as foreign-owned exporting plants improve productivity of local suppliers. We also find some evidence of horizontal spillovers from exporting but these are mainly generated by plants with foreign ownership. These results suggest that positive productivity spillovers are not only generated by the presence of foreign-owned exporting plants but also by exporting activity of domestic firms. The results are robust to controls for agglomeration of economic activity, the importance of non-exporting foreign-owned plants, and plant unobserved heterogeneity. JEL no.  F10, F23, O3, O54     

Learning-by-Exporting: Continuous Productivity Improvements or Capacity Utilization Effects? Evidence from Slovenian Firms

Following along the lines of a growing literature on the causal link between exporting and productivity, this paper analyzes the existence of “learning-by-exporting” using firm-level data for Slovenian manufacturing enterprises between 1994 and 2002. We fail to find conclusive evidence of learning-by-exporting. By matching new exporting firms to “sufficiently” similar non-exporters and using the difference-in-differences method on the matched pairs it is revealed that productivity improvements, although present, are far from permanent and tend to dissipate shortly after initial entry. Confronting the data on factor accumulation with TFP measures indicates that the perceived learning effects may in fact only be a consequence of increased capacity utilization brought about by the opening of an additional market. JEL no. D24, F12, F14     

Productivity Differences and Foreign Market Entry in an Oligopolistic Industry

We show how productivity differences between foreign and indigenous firms affect the choice of the foreign market entry strategy. We identify the conditions necessary for the adoption of a particular strategy depending on the competing firms?? productivity differences as well as each strategy??s cost. In particular, we study tradeoffs between exporting and JV as well as between JV and WOS that were neglected in the firm heterogeneity literature. We find that high productivity differences led the foreign firm to enter host markets via WOS or exporting monopoly, while in the case of smaller productivity differences they entered via different types of JV. The share in joint venture depended positively on the productivity difference and negatively on trade and investment costs.     

EXPORTING AND PRODUCTIVITY: A FIRM‐LEVEL ANALYSIS OF THE TAIWAN ELECTRONICS INDUSTRY

Based on the panel data of Taiwanese electronics firms, this paper explores the relationship between exporting and productivity. Contemporaneous levels of exports and productivity are indeed positively correlated. The causality tests show causality from productivity to exporting and vice versa, implying that self‐selection and learning‐by‐exporting effects coexist in the Taiwan electronics industry, while the learning‐by‐exporting effect is less supported. Exporting also has a positive impact on the productivity growth of firms, while the effect diminishes gradually after entering foreign markets. Decomposing the productivity growth shows that the reallocation effect accounts for only 20 per cent compared to the own‐effect share of 80 per cent, which is mostly contributed by firms that continually export.     

The heterogeneous effect of international outsourcing on firm productivity

This paper analyses how international outsourcing affects plant total factor productivity (TFP) using a census of Irish manufacturing firms. The results point to a striking pattern: the status of being or becoming an outsourcer matters strongly for firms that are indigenous and not exporting, while for exporters and foreign affiliates, TFP increases are lower, insignificant and sometimes negative. On the other hand, higher intensity of outsourcing matters for both exporters and foreign affiliates. The message is clear: international outsourcing’s initial learning effect on TFP is most pronounced when it serves as a first exposure to international markets, while the “scale effect” of outsourcing en masse only occurs to larger, already internationalised firms.     

Export entry and exit by German firms

Export Entry and Exit by German Firms. — While exports have played an important role in German business cycles, little is known about the export supply response of German firms. This paper presents a dynamic model of the export decision by a profit-maximizing firm. Using a panel of German manufacturing plants, we test for the role of plant characteristics and sunk costs in the entry decision. We find evidence for substantial sunk costs: exporting today by a plant increases the probability by 50 percent that the plant will export tomorrow. This advantage depreciates quickly, falling by two-thirds in a year. The authors also find evidence that plant success, as measured by size and productivity, increases the likelihood of exporting.     

Understanding Cross-Country Differences in Exporter Premia: Comparable Evidence for 14 Countries

We use comparable micro level panel data for 14 countries and a set of identically specified empirical models to investigate the relationship between exports and productivity. Our overall results are in line with the big picture that is by now familiar from the literature: exporters are more productive than non-exporters when observed and unobserved heterogeneity is controlled for, and these exporter productivity premia tend to increase with the share of exports in total sales; there is evidence in favour of self-selection of more productive firms into export markets, but nearly no evidence in favour of the learning-by-exporting hypothesis. We document that the exporter premia differ considerably across countries in identically specified empirical models. In a meta-analysis of our results we find, consistent with theoretical predictions, that productivity premia are larger in countries with lower export participation rates, with more restrictive trade policies, lower per capita GDP, less effective government and worse regulatory quality, and in countries exporting to relatively more distant markets. JEL no.  F14, D21     

Exports, FDI, and Productivity: Dynamic Evidence from Japanese Firms

This paper examines the relationship between exports, foreign direct investment, and firm productivity. Using longitudinal panel data on Japanese firms, it is found that the most productive firms engage in exports and foreign direct investment, medium productive firms engage in either exports or foreign direct investment, and the least productive firms focus only on the domestic market. Moreover, exports and foreign direct investment appear to improve firm productivity once the productivity convergence effect is controlled for. Firms that retain a presence in foreign markets, either by exports or foreign direct investment, show the highest productivity growth, which contributes to improvements in national productivity. JEL no. F10, F20, D21     

Innovation strategies and productivity growth in developing countries: Firm-level evidence from Pakistani manufacturers

We examine the determinants of product, process, and organizational innovations, and their impact on firm labor productivity using data from a unique innovation survey of firms in Pakistan. We find significant heterogeneity in the impact of different innovations on labor productivity: Organizational innovation has the largest effect followed by process innovation. But unlike much of the literature, we found a negative impact of product innovation suggesting a disruption effect of new products. We find a strong impact of engaging in knowledge creation on product and process innovation. We also find that external knowledge networks and innovation cooperation play no significant role in firms’ decision to engage in innovation and its intensity, however, vertical linkages with suppliers (clients) promote product (process) innovations. Foreign competition has a negative effect on product innovation and a positive effect on organizational innovation. Exposure to foreign markets both in term of exporting and quality standard certification leads to better innovation performance.     

R&;D and Exporting: A Comparison of British and Irish Firms

This paper investigates the two-way relationship between R&D and export activity. In particular, we concern ourselves with the question whether R&D stimulates exports and, perhaps more importantly, whether export activity leads to increasing innovative activity in terms of R&D (learning-by-exporting). We use two unique firm level databases for Great Britain and the Republic of Ireland and compare the results for these two countries. We find that previous exporting experience enhances the innovative capability of Irish firms. Conversely, no strong learning-by-exporting effects are found for British firms. Arguably part of the differences between Ireland and Britain are attributable to different, cross-country exporting patterns where Irish firms have a greater interface with OECD markets. JEL no.  F14, F23     

Exports as an indicator on or promoter of successful swedish manufacturing firms in the 1990s

We study the link between exports and productivity at the firm level. Like in previous studies we get support for the hypothesis that more productive firms self-select into the export market. In addition, and contrary to many of the former studies, we also obtain evidence that exporting further increases firm productivity. Exporting firms appear to have significantly higher productivity than nonexporting. Moreover, exporters—mainly firms that increase their export intensities—have higher output growth than nonexporters. Reallocation of resources between firms may then have contributed to overall manufacturing productivity growth. Hence, we try to quantify the importance of reallocation. JEL no. F10, D24     

Exports as an indicator on or promoter of successful swedish manufacturing firms in the 1990s

We study the link between exports and productivity at the firm level. Like in previous studies we get support for the hypothesis that more productive firms self-select into the export market. In addition, and contrary to many of the former studies, we also obtain evidence that exporting further increases firm productivity. Exporting firms appear to have significantly higher productivity than nonexporting. Moreover, exporters—mainly firms that increase their export intensities—have higher output growth than nonexporters. Reallocation of resources between firms may then have contributed to overall manufacturing productivity growth. Hence, we try to quantify the importance of reallocation. JEL no. F10, D24