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The Impact of Devaluation on Productivity of Exporting Firms

Author

Listed:
  • Mezid Nasir Keraga

    (Addis Ababa University)

Abstract

This study is designed to empirically establish the impact of devaluation on firms' productivity. The data comes from four waves of the annual survey of Ethiopian Large and Medium Scale Manufacturing Firms (LMSM). We applied control function estimation methods for estimating the production function. The main findings of the study are that there is no strong evidence that devaluation has a positive impact on the total factor productivity of exporting firms. However, the results indicate that less import-dependent but export-oriented firms improve their competitiveness in the post-devaluation period.

Suggested Citation

  • Mezid Nasir Keraga, 2021. "The Impact of Devaluation on Productivity of Exporting Firms," Economics Bulletin, AccessEcon, vol. 41(3), pages 2055-2062.
    • Handle: RePEc:ebl:ecbull:eb-21-00526
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2021/Volume41/EB-21-V41-I3-P175.pdf
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    References listed on IDEAS

    as
    1. Kristin J Forbes, 2002. "How Do Large Depreciations Affect Firm Performance?," IMF Staff Papers, Palgrave Macmillan, vol. 49(Special i), pages 214-238.
    2. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    3. Jen Baggs & Eugene Beaulieu & Loretta Fung, 2009. "Firm survival, performance, and the exchange rate," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(2), pages 393-421, May.
    4. Bo†Young Choi & Ju Hyun Pyun, 2018. "Does real exchange rate depreciation increase productivity? Analysis using Korean firm†level data," The World Economy, Wiley Blackwell, vol. 41(2), pages 604-633, February.
    5. Gabriele Rovigatti & Vincenzo Mollisi, 2018. "Theory and practice of total-factor productivity estimation: The control function approach using Stata," Stata Journal, StataCorp LP, vol. 18(3), pages 618-662, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Devaluation; Productivity; Exports; Control function estimator;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • D2 - Microeconomics - - Production and Organizations

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