Learning-by-exporting and plant characteristics

Abstract

Introduction One of the most frequently asked questions in the trade and growth literature is whether and how international trade or openness of trading regimes promotes productivity growth of countries. Although numerous studies, both theoretical and empirical, have been conducted on this issue, there seems to be no clear consensus yet. A growing number of studies have recently started to utilize f rm-or plant-level data and re-examined this issue, particularly focusing on exporting as a channel of international technology diffusion or knowledge spillover. One empirical regularity emerging from these studies is that exporters are more productive than non-exporters. The positive correlation between exporting and productivity in the cross-sectional context, however, provides little useful information on the direction of causality. On the one hand, this could reflec self-selection into the export market: only productive f rms can expect to recoup the sunk entry cost of entering into the export market. In this case, the causality runs from productivity to exporting. On the other hand, it is also plausible that the positive correlation between exporting and productivity ref ects the learning-by-exporting effect: frms that become exporters could gain new knowledge and expertise after entering the export market and improve their productivity relative to average players in the same industry. The self-selection hypothesis is supported by most studies, but the evidence on learning-by-exporting seems less clear-cut (Tybout 2000). © 2012 Shujiro Urata, Chin Hee Hahn and Dionisius Narjoko.