IDEAS home Printed from https://ideas.repec.org/a/eme/igdrpp/igdr-04-2018-0036.html
   My bibliography  Save this article

Exporting and firm performance: evidence from India

Author

Listed:
  • Apoorva Gupta
  • Ila Patnaik
  • Ajay Shah

Abstract

Purpose - The purpose of this paper is to investigate the direction of causality between firm productivity and export status. The correlation can arise from multiple alternative causal models, and the authors study if more productive firms export, and/or if firms learn to export, and/or if firms learn by exporting. Design/methodology/approach - The authors investigate these relationships, harnessing the natural experiments offered by firms which transitioned into exporting, in a dataset of Indian firms from 1989 to 2015. Each firm which made the transition is matched against a control which did not. The transitions take place across many years, thus permitting a matched event study in firm outcomes. Findings - The authors find there is self-selection of more productive firms into exporting. Firms that make the transition into exporting become bigger, but there is little evidence of learning by exporting, of improvements in productivity right after exporting commences. However, there is evidence of learning to export, that is there is improvement in productivity of export starters in comparison to their productivity a couple of years before they begin to export. Originality/value - The strength of the paper lies in an opportunity for sound measurement: we observe firms make a transition from domestic market into exporting. The transitions take place across many years, thus permitting a matched event study in firm outcomes. Using this methodology, the authors find that firms become more productive a few years before they export, that is they learn to export. They contribute to the literature by bringing evidence of “learning to export” from a developing country.

Suggested Citation

  • Apoorva Gupta & Ila Patnaik & Ajay Shah, 2018. "Exporting and firm performance: evidence from India," Indian Growth and Development Review, Emerald Group Publishing, vol. 12(1), pages 83-104, April.
  • Handle: RePEc:eme:igdrpp:igdr-04-2018-0036
    as

    Download full text from publisher

    File URL: http://www.emeraldinsight.com/10.1108/IGDR-04-2018-0036?utm_campaign=RePEc&WT.mc_id=RePEc
    Download Restriction: Access to full text is restricted to subscribers
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Roberto Alvarez & Ricardo A. López, 2005. "Exporting and performance: evidence from Chilean plants," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(4), pages 1384-1400, November.
    2. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
    3. A. Isgut, 2001. "What's Different about Exporters? Evidence from Colombian Manufacturing," Journal of Development Studies, Taylor & Francis Journals, vol. 37(5), pages 57-82.
    4. Wagner, Joachim, 2002. "The causal effects of exports on firm size and labor productivity: first evidence from a matching approach," Economics Letters, Elsevier, vol. 77(2), pages 287-292, October.
    5. Greenaway, David & Kneller, Richard, 2008. "Exporting, productivity and agglomeration," European Economic Review, Elsevier, vol. 52(5), pages 919-939, July.
    6. Joachim Wagner, 2016. "Exports and Productivity: A Survey of the Evidence from Firm Level Data," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 1, pages 3-41, World Scientific Publishing Co. Pte. Ltd..
    7. Guido W. Imbens, 2015. "Matching Methods in Practice: Three Examples," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 373-419.
    8. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    9. Sushanta Mallick & Yong Yang, 2013. "Productivity Performance of Export Market Entry and Exit: Evidence from Indian Firms," Review of International Economics, Wiley Blackwell, vol. 21(4), pages 809-824, September.
    10. Sofronis K. Clerides & Saul Lach & James R. Tybout, 1998. "Is Learning by Exporting Important? Micro-Dynamic Evidence from Colombia, Mexico, and Morocco," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 903-947.
    11. Pinelopi K Goldberg & Amit K Khandelwal & Nina Pavcnik & Petia Topalova, 2010. "Multiproduct Firms and Product Turnover in the Developing World: Evidence from India," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 1042-1049, November.
    12. Haidar, Jamal Ibrahim, 2012. "Trade and productivity: Self-selection or learning-by-exporting in India," Economic Modelling, Elsevier, vol. 29(5), pages 1766-1773.
    13. Aw, Bee Yan & Chung, Sukkyun & Roberts, Mark J, 2000. "Productivity and Turnover in the Export Market: Micro-level Evidence from the Republic of Korea and Taiwan (China)," World Bank Economic Review, World Bank Group, vol. 14(1), pages 65-90, January.
    14. Iacovone, Leonardo & Javorcik, Beata, 2012. "Getting Ready: Preparation for Exporting," CEPR Discussion Papers 8926, C.E.P.R. Discussion Papers.
    15. Alla Lileeva & Daniel Trefler, 2010. "Improved Access to Foreign Markets Raises Plant-level Productivity…For Some Plants," The Quarterly Journal of Economics, Oxford University Press, vol. 125(3), pages 1051-1099.
    16. Tabrizy, Saleh S. & Trofimenko, Natalia, 2010. "Scope for export-led growth in a large emerging economy: Is India learning by exporting?," Kiel Working Papers 1633, Kiel Institute for the World Economy (IfW).
    17. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    18. Paula Bustos, 2011. "Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms," American Economic Review, American Economic Association, vol. 101(1), pages 304-340, February.
    19. Jens Matthias Arnold & Katrin Hussinger, 2005. "Export Behavior and Firm Productivity in German Manufacturing: A Firm-Level Analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(2), pages 219-243, July.
    20. De Loecker, Jan, 2007. "Do exports generate higher productivity? Evidence from Slovenia," Journal of International Economics, Elsevier, vol. 73(1), pages 69-98, September.
    21. Delgado, Miguel A. & Farinas, Jose C. & Ruano, Sonia, 2002. "Firm productivity and export markets: a non-parametric approach," Journal of International Economics, Elsevier, vol. 57(2), pages 397-422, August.
    22. John Baldwin & Wulong Gu, 2003. "Export-market participation and productivity performance in Canadian manufacturing," Canadian Journal of Economics, Canadian Economics Association, vol. 36(3), pages 634-657, August.
    23. Hung, Juann & Salomon, Matt & Sowerby, Stacia, 2004. "International trade and US productivity," Research in International Business and Finance, Elsevier, vol. 18(1), pages 1-25, April.
    24. Mary Hallward-Driemeier & Giuseppe Iarossi & Kenneth L. Sokoloff, 2002. "Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data," NBER Working Papers 8894, National Bureau of Economic Research, Inc.
    25. Van Biesebroeck, Johannes, 2005. "Exporting raises productivity in sub-Saharan African manufacturing firms," Journal of International Economics, Elsevier, vol. 67(2), pages 373-391, December.
    26. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
    27. Priya Ranjan & Jibonayan Raychaudhuri, 2011. "Self-selection vs learning: evidence from Indian exporting firms," Indian Growth and Development Review, Emerald Group Publishing, vol. 4(1), pages 22-37, April.
    28. Davide Castellani, 2002. "Export behavior and productivity growth: Evidence from Italian manufacturing firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(4), pages 605-628, December.
    29. Blalock, Garrick & Gertler, Paul J., 2004. "Learning from exporting revisited in a less developed setting," Journal of Development Economics, Elsevier, vol. 75(2), pages 397-416, December.
    30. Joachim Wagner, 2014. "Exports, foreign direct investments and productivity: are services firms different?," The Service Industries Journal, Taylor & Francis Journals, vol. 34(1), pages 24-37, January.
    31. Pinelopi Koujianou Goldberg & Amit Kumar Khandelwal & Nina Pavcnik & Petia Topalova, 2010. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 125(4), pages 1727-1767.
    32. Rudrani Bhattacharya & Ila Patnaik & Ajay Shah, 2012. "Export Versus FDI in Services," The World Economy, Wiley Blackwell, vol. 35(1), pages 61-78, January.
    33. Amil Petrin & Brian P. Poi & James Levinsohn, 2004. "Production function estimation in Stata using inputs to control for unobservables," Stata Journal, StataCorp LP, vol. 4(2), pages 113-123, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mercè Sala-Ríos & Mariona Farré-Perdiguer & Teresa Torres-Solé, 2020. "Exporting and Firms’ Performance—What about Cooperatives? Evidence from Spain," Sustainability, MDPI, Open Access Journal, vol. 12(20), pages 1-22, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sharma, Chandan, 2018. "Exporting, access of foreign technology, and firms’ performance: Searching the link in Indian manufacturing," The Quarterly Review of Economics and Finance, Elsevier, vol. 68(C), pages 46-62.
    2. Yang, Yong & Mallick, Sushanta, 2014. "Explaining cross-country differences in exporting performance: The role of country-level macroeconomic environment," International Business Review, Elsevier, vol. 23(1), pages 246-259.
    3. Ma, Yue & Tang, Heiwai & Zhang, Yifan, 2014. "Factor Intensity, product switching, and productivity: Evidence from Chinese exporters," Journal of International Economics, Elsevier, vol. 92(2), pages 349-362.
    4. Joachim Wagner, 2016. "Exports and Productivity: A Survey of the Evidence from Firm Level Data," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 1, pages 3-41, World Scientific Publishing Co. Pte. Ltd..
    5. 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.
    6. Neil Foster-McGregor, 2012. "Innovation and Technology Transfer across Countries," wiiw Research Reports 380, The Vienna Institute for International Economic Studies, wiiw.
    7. Ana M. Fernandes & Alberto E. Isgut, 2005. "Learning-by-Doing, Learning-by-Exporting, and Productivity: Evidence from Colombia," DEGIT Conference Papers c010_018, DEGIT, Dynamics, Economic Growth, and International Trade.
    8. BOERMANS, Martijn Adriaan, 2013. "LEARNING-BY-EXPORTING AND DESTINATION EFFECTS: EVIDENCE FROM AFRICAN SMEs," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(2), pages 149-168.
    9. Pedro S. Martins & Yong Yang, 2007. "The Impact of Exporting on Firm Productivity: A Meta-Analysis," Working Papers 6, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    10. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    11. Flora Bellone & Patrick Musso & Lionel Nesta & Michel Quere, 2008. "The U-Shaped Productivity Dynamics of French Exporters," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(4), pages 636-659, December.
    12. Yong Yang & Sushanta Mallick, 2010. "Export Premium, Self‐selection and Learning‐by‐Exporting: Evidence from Chinese Matched Firms," The World Economy, Wiley Blackwell, vol. 33(10), pages 1218-1240, October.
    13. DU, Julan & LU, Yi & TAO, Zhigang & YU, Linhui, 2012. "Do domestic and foreign exporters differ in learning by exporting? Evidence from China," China Economic Review, Elsevier, vol. 23(2), pages 296-315.
    14. Martijn Boermans & Hein Roelfsema, 2015. "The Effects of Internationalization on Innovation: Firm-Level Evidence for Transition Economies," Open Economies Review, Springer, vol. 26(2), pages 333-350, April.
    15. Tabrizy, Saleh S. & Trofimenko, Natalia, 2010. "Scope for export-led growth in a large emerging economy: Is India learning by exporting?," Kiel Working Papers 1633, Kiel Institute for the World Economy (IfW).
    16. Matthew A. Cole & Robert J. R. Elliott & Supreeya Virakul, 2010. "Firm Heterogeneity, Origin of Ownership and Export Participation," The World Economy, Wiley Blackwell, vol. 33(2), pages 264-291, February.
    17. Maggioni Daniela, 2012. "Learning by Exporting in Turkey: An Investigation for Existence and Channels," Global Economy Journal, De Gruyter, vol. 12(2), pages 1-20, June.
    18. David Aristei & Davide Castellani & Chiara Franco, 2013. "Firms’ exporting and importing activities: is there a two-way relationship?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(1), pages 55-84, March.
    19. Sushanta Mallick & Yong Yang, 2013. "Productivity Performance of Export Market Entry and Exit: Evidence from Indian Firms," Review of International Economics, Wiley Blackwell, vol. 21(4), pages 809-824, September.
    20. Alvaro Garcia-Marin & Nico Voigtländer, 2019. "Exporting and Plant-Level Efficiency Gains: It's in the Measure," Journal of Political Economy, University of Chicago Press, vol. 127(4), pages 1777-1825.

    More about this item

    Keywords

    Self-selection; Exports; Firm productivity; Learning by exporting; Learning to export; F43; L1; D24;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:igdrpp:igdr-04-2018-0036. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.emerald.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Virginia Chapman (email available below). General contact details of provider: http://www.emerald.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.