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Firm Productivity and Exports: Evidence from Ethiopian manufacturing

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  • Bigsten, Arne

    () (Department of Economics, School of Business, Economics and Law, University of Gothenburg)

  • Gebreeyesus, Mulu

    () (Department of Economics, School of Business, Economics and Law, University of Gothenburg)

Abstract

This paper examines the causal relationship between exporting and productivity using a ten years long plant-level panel data set from an annual census of Ethiopian manufacturing, rarely available in the sub-Saharan Africa. We exploited its length to trace the trajectory of TFP and other productivity measures of groups of firms classified by their export history. We then tested learning-by-exporting using a one-step system-GMM approach with the export-status included directly in the production function. We addressed potential endogeneity problems by using instrumental variables, and also applied a matching analysis to address potential selection bias. We found strong evidence of not only self-selection but also learning-by-exporting. Depending on the specification previous exporting appears to have shifted the production function by 15-32 %. Exporters had on average three times more employees, and paid 1.6 times higher average wage than those of non-exporters.

Suggested Citation

  • Bigsten, Arne & Gebreeyesus, Mulu, 2008. "Firm Productivity and Exports: Evidence from Ethiopian manufacturing," Working Papers in Economics 303, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0303
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    File URL: http://hdl.handle.net/2077/10037
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    References listed on IDEAS

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    1. Wagner, Joachim, 2002. "The causal effects of exports on firm size and labor productivity: first evidence from a matching approach," Economics Letters, Elsevier, pages 287-292.
    2. Arne Bigsten & Mans Söderbom, 2006. "What Have We Learned from a Decade of Manufacturing Enterprise Surveys in Africa?," World Bank Research Observer, World Bank Group, vol. 21(2), pages 241-265.
    3. 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.
    4. Frank Windmeijer, 2000. "A finite sample correction for the variance of linear two-step GMM estimators," IFS Working Papers W00/19, Institute for Fiscal Studies.
    5. Chin Hee Hahn, 2004. "Exporting and Performance of Plants: Evidence from Korean Manufacturing," NBER Working Papers 10208, National Bureau of Economic Research, Inc.
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    7. Arne Bigsten & Paul Collier & Stefan Dercon & Marcel Fafchamps & Bernard Gauthier & Jan Willem Gunning & Abena Oduro & Remco Oostendorp & Catherine Pattillo & Måns Soderbom & Francis Teal & Albert Zeu, 2004. "Do African Manufacturing Firms Learn from Exporting?," Journal of Development Studies, Taylor & Francis Journals, vol. 40(3), pages 115-141.
    8. Joachim Wagner, 2007. "Exports and Productivity: A Survey of the Evidence from Firm-level Data," The World Economy, Wiley Blackwell, pages 60-82.
    9. Richard Blundell & Stephen Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
    10. Sourafel Girma & David Greenaway & Richard Kneller, 2004. "Does Exporting Increase Productivity? A Microeconometric Analysis of Matched Firms," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 855-866, November.
    11. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, pages 115-143.
    12. Delgado, Miguel A. & Farinas, Jose C. & Ruano, Sonia, 2002. "Firm productivity and export markets: a non-parametric approach," Journal of International Economics, Elsevier, pages 397-422.
    13. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, pages 545-564.
    14. M. Soderbaum & F. Teal, 2000. "Skills, Investment and Exports from Manufacturing Firms in Africa," Journal of Development Studies, Taylor & Francis Journals, pages 13-43.
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    Citations

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    Cited by:

    1. Siba, Eyerusalem & Gebreeyesus, Mulu, 2014. "Learning to export and learning by exporting: The case of Ethiopian manufacturing," WIDER Working Paper Series 105, World Institute for Development Economic Research (UNU-WIDER).
    2. repec:oup:jafrec:v:26:y:2017:i:1:p:93-118. is not listed on IDEAS
    3. Chandan Sharma & Ritesh Kumar Mishra, 2011. "Does export and productivity growth linkage exist? Evidence from the Indian manufacturing industry," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(6), pages 633-652, November.
    4. 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.
    5. Ung, Luyna & Chhair, Sokty, 2014. "Exporting and foreign direct investment spillovers: Cambodia's experience," WIDER Working Paper Series 079, World Institute for Development Economic Research (UNU-WIDER).
    6. repec:afe:journl:v:19:y:2017:i:1:p:133-160 is not listed on IDEAS
    7. Jones, Chris & Morrissey, Oliver & Nelson, Doug, 2011. "Did the World Bank Drive Tariff Reforms in Eastern Africa?," World Development, Elsevier, vol. 39(3), pages 324-335, March.
    8. Neil Foster-McGregor & Anders Isaksson & Florian Kaulich, 2014. "Importing, exporting and performance in sub-Saharan African manufacturing firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 309-336.
    9. Cié Fatou & Ji Eun Choi, 2015. "Do firms learn by exporting or learn to export? Evidence from Senegalese manufacturing plant," WIDER Working Paper Series 057, World Institute for Development Economic Research (UNU-WIDER).
    10. Marie-Ange VEGANZONES-VAROUDAKIS & Arup MITRA & Chandan SHARMA, 2012. "Are reforms productive? Explaining productivity and efficiency in the Indian manufacturing," Working Papers 201233, CERDI.
    11. Antonio Cruz & Carol Newman & John Rand & Finn Tarp, 2017. "Learning by Exporting: The Case of Mozambican Manufacturing," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 26(1), pages 93-118.
    12. repec:afe:journl:v:19:y:2017:i:1:p:113-131 is not listed on IDEAS
    13. Wassie, Tewodros Ayenew, 2017. "Revisiting the causal effects of exporting on productivity: Does price heterogeneity matter?," MPRA Paper 80576, University Library of Munich, Germany.
    14. Neil Foster-McGregor & Anders Isaksson & Florian Kaulich, 2014. "Importing, exporting and performance in sub-Saharan African manufacturing firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 309-336.
    15. 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.
    16. Tadesse WODAJO, Tadesse & Dawit SENBET, Dawit, 2013. "Distributions Of Public And Private Manufacturing Firms And Determinants Of Productivity In Ethiopia," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 13(1).
    17. repec:eee:iburev:v:27:y:2018:i:1:p:218-230 is not listed on IDEAS
    18. Vu, Van Huong, 2012. "Higher productivity in Exporters: self-selection, learning by exporting or both? Evidence from Vietnamese manufacturing SMEs," MPRA Paper 40708, University Library of Munich, Germany.
    19. Newman, Carol & Rand, John & Tarp, Finn & Thi Tue Anh, Nguyen, 2014. "Exporting and productivity: The role of ownership and innovation in the case of Vietnam," WIDER Working Paper Series 070, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Productivity; exports; Ethiopia; manufacturing;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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