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Trade and productivity: Self-selection or learning-by-exporting in India

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  • Haidar, Jamal Ibrahim

Abstract

Recent literature tried to explain the Indian growth miracle in different ways, ranging from trade liberalization to industrial reforms. Using data on Indian manufacturing firms, this paper analyzes the relationship between firm's productivity and export market participation during 1991–2004. While it provides evidence of the self-selection hypothesis by showing that more productive firms become exporters, the results do not show that entry into export markets enhances productivity. The paper examines the explanation of self selection hypothesis for total factor productivity differences across 33,510 exporting and non-exporting firms. It uses propensity score matching to test the learning-by-exporting hypothesis. In line with the prediction of recent heterogeneous firm models of international trade, the main finding of the paper is: more productive firms become exporters but it is not the case that learning by exporting is a channel fuelling growth in Indian manufacturing.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 29 (2012)
Issue (Month): 5 ()
Pages: 1766-1773

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Handle: RePEc:eee:ecmode:v:29:y:2012:i:5:p:1766-1773

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Trade; Learning-by-exporting hypothesis; Self-selection hypothesis; Total factor productivity; Causality; Heterogeneous firm model;

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  8. Francesco Serti & Chiara Tomasi, 2007. "Self Selection and Post-Entry effects of Exports. Evidence from Italian Manufacturing firms," LEM Papers Series 2007/20, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
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Cited by:
  1. Nanditha Mathew, 2012. "Drivers of Firm Growth: Micro-evidence from Indian Manufacturing," LEM Papers Series 2012/24, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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