Export Spillovers: Comparative Evidence From Kenya and Malaysia

This paper uses firm-level data from Kenya and Malaysia for 2000-05 to investigate the existence of export spillovers from foreign-owned firms to domestic firms and their transmission mechanisms. The paper shows that exporting firms are larger, pay better wages and are more productive than non-exporters. Foreign firms are also more likely to export than domestic firms in both countries. However, foreign firms in Kenya are more labour intensive than those in Malaysia. Firms in Malaysia are more profitable, with higher wages and higher productivity, than firms in Kenya. There are contrasting results with regard to export spillovers. In Malaysia, there is evidence of positive spillovers largely from backward linkages and negative spillovers from competition effects and information channels. In Kenya, on the other hand, there is evidence of export spillovers through demonstration effects and the competition channel.