Abstract
Do firms become more efficient after becoming exporters? Do exporters generate positive externalities for domestically oriented producers? In this paper we tackle these questions by analyzing the causal links between exporting and productivity using plant-level data. We look for evidence that firms' cost processes change after they break into foreign markets. We find that relatively efficient firms become exporters; however, in most industries, firms' costs are not affected by previous exporting activities. So the well-documented positive association between exporting and efficiency is explained by the self-selection of the more efficient firms into the export market. We also find some evidence of positive regional externalities.
| Original language | English |
|---|---|
| Pages (from-to) | 903-947 |
| Number of pages | 45 |
| Journal | Quarterly Journal of Economics |
| Volume | 113 |
| Issue number | 3 |
| DOIs | |
| State | Published - Aug 1998 |
Bibliographical note
Funding Information:Participating in export markets brings firms into contact with international best practice and fosters learning and productivity growth [World Bank 1997]. . . . a good deal of the information needed to augment basic capabilities has come from the buyers of exports who freely provided product designs and offered technical assistance to improve process technology in the context of * We thank Eli Berman, Andrew Bernard, Donald Keesing, Lawrence Katz, Wolfgang Keller, Yair Mundlak, Dani Rodrik, and an anonymous referee for their comments, as well as seminar participants at Johns Hopkins University, the University of California at Los Angeles, the University of Maryland, the World Bank, Michigan State University, and the NBER Summer Institute (International Trade and Investment session). We are also grateful to Manuel Arellano and Steven Bond for the use of their Dynamic Panel Data program. This paper was funded by the World Bank research project ‘‘Micro-Foundations of Successful Export Promotion,’’ RPO 679-20 and the World Bank’s International Trade Division, International Economics Department. This paper was written while Clerides was a Summer Intern at the World Bank, Lach was visiting the Industrial Output Section of the Federal Reserve Board, and Tybout was visiting the International Trade Division in the International Economics Department of the World Bank. The views expressed herein are those of the authors, and do not necessarily reflect those of the World Bank or the Federal Reserve System.
