Do Exporters Perform Better? Evidence from Manufacturing Plants in Iran
35 Pages Posted: 21 Nov 2016 Last revised: 21 Mar 2017
Date Written: November 19, 2016
Abstract
Both theory and empirics suggest that exporters perform better. Using a panel dataset of manufacturing plants in Iran (2003-2011) we test learning by exporting. In order to address endogenous selection into export, we employ the methods of data trimming and Propensity Score Weighting. (Non)Exporters with very (low) high likelihood of exporting are excluded, in addition to the always exporters and exiters. The comparison is between the two groups of entrants (treated group) and domestic sellers (control). Observations are weighted by the likelihood of becoming exporters which is estimated based on their past performance. Our findings document the followings: Compared to domestic firms, exporters are larger in any size or productivity measure (except for payment per labor). Outcomes of interests are labor, value added, sale, investment and energy usage. Results are robust to using Fixed Effect specification, which changes the control group from domestic ones to firms’ average performance. When comparing exporters’ growth rates with their own rates prior to entering the foreign market, a similar learning effect is found (except for labor payment). The pattern exists both for the size and productivity measures. However, using a model of distributed lags, the results seem not to be long lasting: the impacts are spot (observed in the first year of exporting) and disappear later (in second and third years of exporting). Many robustness tests are supporting the results.
Keywords: International Trade, Exporters Learning, Propensity Score Weighting
Suggested Citation: Suggested Citation