Exporting and Plant-Level Efficiency Gains: It's in the Measure
55 Pages Posted: 11 May 2013 Last revised: 5 Jul 2023
There are 2 versions of this paper
Exporting and Plant-Level Efficiency Gains: It's in the Measure
Date Written: May 2013
Abstract
While there is strong evidence for productivity-driven selection into exporting, the empirical literature has struggled to identify export-related efficiency gains within plants. Previous research typically derived revenue productivity (TFPR), which is downward biased if more efficient producers charge lower prices. Using a census panel of Chilean manufacturing plants, we compute plant-product level marginal cost as an efficiency measure that is not affected by output prices. For export entrant products, we find efficiency gains of 15-25%. Because markups remain relatively stable after export entry, most of these gains are passed on to customers in the form of lower prices, and are thus not reflected by TFPR. These results are confirmed when we use tariffs to predict export entry. We also document very similar results in Colombian and Mexican manufacturing plants. In addition, we find sizeable efficiency gains for tariff-induced export expansions of existing exporters. Only one quarter of these gains are reflected by TFPR, due to a partial rise in markups. Our results thus imply that within-plant gains from trade are substantially larger than previously documented. Evidence suggests that a complementarity between exporting and investment in technology is an important driver behind these gains.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Exports and Productivity: A Survey of the Evidence from Firm Level Data
-
Market Entry Costs, Producer Heterogeneity, and Export Dynamics
By Sanghamitra Das, Mark J. Roberts, ...
-
Firm Heterogeneity, Exporting and Foreign Direct Investment: A Survey
By Richard Kneller and David Greenaway
-
Participation in Export Markets and Productivity Performance in Canadian Manufacturing
By John R. Baldwin and Wulong Gu
-
Export Entry and Exit by German Firms
By Andrew B. Bernard and Joachim Wagner
-
Export Behavior and Productivity Growth: Evidence from Italian Manufacturing Firms