Learning-by-Exporting Effects: Are They for Real?

Abstract

We investigate whether exposure to export markets improves plant productivity. Our estimation framework adds export experience as an additional state variable and a fixed cost of entry into export markets to Olley and Pakes's (1996) behavioral model. We find robust evidence of a positive effect of export experience on productivity, controlling for the bias caused by self-selection of the most productive plants into exporting. The effect is stronger for plants with the most exposure to exporting, and statistically insignificant for exporters that stop exporting. Our analysis also suggests that matching methods may produce upwardly biased estimates of learning-by-exporting effects.

Keywords: Learning, Trade, Total Factor Productivity, Exports, Export-Led Growth, Simultaneity and Production Functions

JEL Classification: C14, D21, D24, F10, L60