Exporting and Firm Performance: Evidence from a Randomized Trial

58 Pages Posted: 8 Dec 2014

See all articles by David Atkin

David Atkin

Massachusetts Institute of Technology (MIT) - Department of Economics

Amit Khandelwal

Columbia University - Columbia Business School, Finance; National Bureau of Economic Research (NBER); Bureau for Research and Economic Analysis of Development (BREAD); Jameel Poverty Action Lab (JPAL)

Adam Osman

University of Illinois at Urbana-Champaign; Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab (J-PAL); Economic Research Forum (ERF)

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Date Written: December 2014

Abstract

We conduct a randomized control trial that generates exogenous variation in the access to foreign markets for rug producers in Egypt. Combined with detailed survey data, we causally identify the impact of exporting on firm performance. Treatment firms report 15-25 percent higher profits and exhibit large improvements in quality alongside reductions in output per hour relative to control firms. These findings do not simply reflect firms being offered higher margins to manufacture high-quality products that take longer to produce. Instead, we find evidence of learning-by-exporting whereby exporting improves technical efficiency. First, treatment firms have higher productivity and quality after accounting for rug specifications. Second, when asked to produce an identical domestic rug using the same inputs, treatment firms receive higher quality assessments despite no difference in production time. Third, treatment firms exhibit learning curves over time. Finally, we document knowledge transfers with quality increasing most along the specific dimensions that the knowledge pertained to.

Keywords: exports, learning-by-exporting, market access, productivity, quality

JEL Classification: D24, F10, F14

Suggested Citation

Atkin, David G. and Khandelwal, Amit Kumar and Osman, Adam, Exporting and Firm Performance: Evidence from a Randomized Trial (December 2014). CEPR Discussion Paper No. DP10276, Available at SSRN: https://ssrn.com/abstract=2535413

David G. Atkin (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Amit Kumar Khandelwal

Columbia University - Columbia Business School, Finance ( email )

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Bureau for Research and Economic Analysis of Development (BREAD) ( email )

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Jameel Poverty Action Lab (JPAL) ( email )

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Adam Osman

University of Illinois at Urbana-Champaign ( email )

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Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab (J-PAL) ( email )

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Cambridge, MA 02142
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Economic Research Forum (ERF) ( email )

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