Which manufacturing firms learn by exporting?

FEP Working Papers, 2010

Using a longitudinal database (1996-2003) at the plant level, this paper aims to shed light on the causal nexus between international trade engagement and productivity in Portugal. We analyse in particular the learning-by-exporting hypotheses. In line with recent empirical literature, ...

2013

Investigacion Economica, 2013

Using a longitudinal database (1996-2003) at the plant level, this article aims to shed light on the proposition that most productive domestic firms self-select to export markets. Self-selection and learning by exporting are two non-mutually-exclusive theses that attempt to explain the high correlation between firms' international trade involvement and their superior performance relative to domestic firms. In general, we find evidence of a self-selection to exports. However, there is significant heterogeneity of sales destinations, firm import status before exporting, and the specificities of the sectors firms belong to.

2007

This study empirically assesses the microeconomic exporting-productivity nexus for both the UK manufacturing and services sectors during 1996-2004, based on a weighted FAME dataset. Our results show that firms that are older, that possess intangible assets or that have higher (labour) productivity in the year prior to exporting, are significantly more likely to sell overseas. In testing the post-entry 'learning-by-exporting' effect, we employ three approaches to controlling for endogeneity and sample selection, viz. instrumental variables, control function and matching, and find that this effect is present in many industries but not universal, and also varies amongst different types of exporting firms. Our overall estimate for the UK economy suggests a substantial post-entry productivity effect for firms new to exporting; a negative effect for firms exiting overseas markets; and large productivity gains while exporting for those that both enter and exit. JEL codes: D24; F14; L25; R38

Review of World Economics, 2007

There is extensive empirical evidence pointing to the existence of sunk costs to exporting. Only higher productivity firms can profitably cover these and enter export markets. This is the standard explanation for the regularity with which econometric analyses of the characteristics of exporters report that they are more productive than non-exporters. But what happens to their productivity trajectory once they have entered? Theory points to the possibility of a further productivity boost, attributable to the effects of learning and competition, though as yet there is little empirical support for this. We investigate whether this is because the potential for this boost depends apon how exposed to competition the industry in which entry takes place is. We find that industry differences are important in determining whether learning effects boost productivity after export market entry.

FEP Working Papers, 2010

Using a longitudinal database (1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003) at the plant level, this paper aims to shed light, on the thesis that most productive domestic firms self select to export markets. Self selection and learning by exporting are two non-mutually exclusive theses that try to explain the high correlation between international trade involvement of firms and their superior performance, relative to domestic firms. In general, we find evidence of a self selection to exports. However, there is a significant heterogeneity according to the destination of sales, to firms' import status before exporting and to the specificities of sectors firms' belong to. competitive markets provide the conditions for exporters to become more efficient (competition effect); (iii) a wider network of contacts with distinct sources, such as clients, suppliers, competitors, professional and scientific institutions may enhance efficiency improvements and innovations; (iv) the bigger dimension of international markets may offer better conditions for scale economies. Nevertheless, the absence of a coherent theory to support and explain the LBE thesis may be due to difficulties in controlling the learning mechanisms in empirical research, and this difficulty block further theoretical advances.

Canadian Journal of Economics/Revue canadienne d'économique, 2008

Case study evidence suggests that exporting firms learn from their clients. But econometric evidence, mostly using exporting and TFP growth, is mixed. We use a UK panel data set with firm-level information on exporting and productivity. Our innovation is that we also have direct data on the sources of learning (in this case about new technologies). Controlling for fixed effects we have two main findings. First, we find firms who exported in the past are more likely to then report that they learnt from buyers (relative to learning from other sources). Second, firms who had learned from buyers (more than they learnt from other sources) in the past are more likely to then have productivity growth. This suggests some support for the learning-by-exporting hypothesis.

Small Business Economics, 2012

Using a matching approach, we compare the productivity trajectories of future exportentrants and matched non-entrants. Future exporters have higher productivity than do non-entrants before entry into international markets, which indicates self-selection into exports. More interestingly, we also observe a productivity increase among exportentrants relative to non-entrants before export entry. This might be explained by higher investments in physical capital prior to export entry. We find no evidence that the productivity gap between export-entrants and non-entrants continues to grow after export entry. Our results suggest that learning-to-export occurs but that learning-byexporting does not. In contrast to previous studies on Swedish manufacturing, we focus particularly on small and medium-sized enterprises (SMEs).

Review of World Economics, 2009

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.

In this work we analyze the effect of export destinations on Total Factor Productivity (TFP) of manufacturing Uruguayan firms for the period 1997-2006. We study two effects: self-selection and learning by exporting. To this end, we match firm level data with export destinations by firm. We find firms with higher shares of their total exports to developed countries have higher productivity than firms exporting to less developed ones. There is evidence of self-selection with a stronger effect for firms exporting to developed countries. Nevertheless, applying transition group methodology in order to mitigate endogeneity issues, there is no evidence that exporting to developed countries enhances productivity through learning by exporting. However, evidence of learning by exporting is found for those firms that start exporting to less developed countries. These findings suggest an international strategy through which firms reach gains in productivity exporting to markets with lower entry cost, and once they have learned and improved their productivity, are in a better position to enter into more developed countries.