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International trade and performance of firms: Unraveling export, import and productivity puzzle

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  • Sharma, Chandan
  • Mishra, Ritesh Kumar

Abstract

This article explores the linkage between trade participation and productivity performance for a sample of Indian manufacturing firms over the period 1994–2006. We consider two yardsticks of productivity, namely total factor productivity (TFP) and labor productivity for analysis purpose. As far as the labor productivity is concerned, the results indicate that exporters, importers and both way traders are more productive than others. Although, overall our results are somewhat mixed and indicate for a weak inter-link between trade and productivity, but the result appear to be more favorable for the export channel of trade as it clearly indicates that exporting leads to productivity improvement over time. There are also some statistical evidences to conclude that more productive firms self-select themselves in the exporting as well as importing market. The learning effects of importing on productivity growth turn out to be more favorable for labor productivity than TFP. Finally, the results clearly highlight the positive effect of R&D efforts of firms on labor productivity in the Indian manufacturing.

Suggested Citation

  • Sharma, Chandan & Mishra, Ritesh Kumar, 2015. "International trade and performance of firms: Unraveling export, import and productivity puzzle," The Quarterly Review of Economics and Finance, Elsevier, vol. 57(C), pages 61-74.
  • Handle: RePEc:eee:quaeco:v:57:y:2015:i:c:p:61-74
    DOI: 10.1016/j.qref.2015.02.001
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    Cited by:

    1. Awadhesh Pratap SINGH, 2016. "Do Technology Spillovers Accelerate Performance of Firms? Unravelling a Puzzle from Indian Manufacturing Industry," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 3, pages 108-120.
    2. repec:bpj:glecon:v:17:y:2017:i:1:p:11:n:8 is not listed on IDEAS
    3. repec:eee:ecmode:v:70:y:2018:i:c:p:447-457 is not listed on IDEAS
    4. repec:ebl:ecbull:eb-17-00651 is not listed on IDEAS
    5. N. Krasnopeeva & E. Nazrullaeva & A. Peresetsky & E. Shchetinin., 2016. "To export or not to export? The link between the exporter status of a firm and its technical efficiency in Russia’s manufacturing sector," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.

    More about this item

    Keywords

    Learning-by-exporting; Learning-by-importing; Self-selection; India;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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