Exporting and Upgrading of Product Portfolio: Evidence from Korea, Japan and Indonesia

Abstract

This paper examines the effect of exporting on 'product portfolio upgrading' in a plant, using plant-product matched datasets for Korea, Japan and Indonesia. First, we find that a substantial part of aggregate shipments growth is explained by net adding of products for all three countries. Second, export starters are more likely to add products and to change product shares in plants than never exporters. Third, added products tend to have higher product quality than dropped products. Therefore, our results imply that the entry to export markets plays an important role in product portfolio upgrading: the process of reallocation from lower-attribute to higher-attribute products.