Export and productivity in global value chains: comparative evidence from Latvia and Estonia

This paper investigates the effect of exporting on productivity, often referred to as “learning by exporting”, in the context of global value chains (GVCs). Although the rise of GVCs raised hopes that it would facilitate knowledge transfer from technologically advanced foreign buyers, empirical evidence on its role in learning by exporting is scant. We use data of Latvian and Estonian firms to observe how learning by exporting differs across types of exports associated with different kinds of participation in GVCs. We find that productivity gains resulting from export entry are significantly larger for specific types of exports, such as exports of knowledge-intensive services, intermediate goods and re-exports. These exports correspond to activities that generate high value added within GVCs. Our findings indicate that the intensity of interactions with global buyers alongside exporters’ room for technology catch-up define the extent of learning by exporting in GVCs.