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Factors driving the firms decision to export. Firm-level evidence from Poland

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  • Hagemejer, Jan

Abstract

The model by Melitz (2003) predicts that if firms differ in their productivity (TFP) and there exists a fixed costs of entry to export markets, firms begin exporting if productivity exceeds a certain threshold value. Productivity is thus a crucial factor behind firms' export market participation. To verify this, I estimate a simple probit model of the firms decision to export, based on the Polish manufacturing firm-level data. Estimation of productivity of individual firms is troublesome as the standard OLS method produces biased estimates due to the endogeneity of factor choice. I use a multi-stage semi-parametric approach, as proposed by Olley and Pakes (1996) controlling for endogeneity and the bias caused by firms exiting and entering the sample during the period under consideration. Besides determining the significance of the TFP coefficient in the probit regression, I examine the paths of productivity of firms entering the export market and make an attempt to identify the potential learning-by-exporting effects.

Suggested Citation

  • Hagemejer, Jan, 2007. "Factors driving the firms decision to export. Firm-level evidence from Poland," MPRA Paper 17717, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:17717
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    References listed on IDEAS

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    1. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2003. "Falling Trade Costs, Heterogeneous Firms, and Industry Dynamics," Working Paper Series WP03-4, Peterson Institute for International Economics.
    2. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
    3. Nina Pavcnik, 2002. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(1), pages 245-276.
    4. Andrew B. Bernard & J. Bradford Jensen, 2004. "Why Some Firms Export," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 561-569, May.
    5. 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.
    6. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    7. Roberts, Mark J & Tybout, James R, 1997. "Producer Turnover and Productivity Growth in Developing Countries," The World Bank Research Observer, World Bank, vol. 12(1), pages 1-18, February.
    8. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    9. Bee Yan Aw & Xiaomin Chen & Mark J. Roberts, 1997. "Firm-level Evidence on Productivity Differentials, Turnover, and Exports in Taiwanese Manufacturing," NBER Working Papers 6235, National Bureau of Economic Research, Inc.
    10. 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, vol. 87(4), pages 545-564, September.
    11. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    12. 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, President and Fellows of Harvard College, vol. 113(3), pages 903-947.
    13. Andrew B. Bernard & J. Bradford Jensen, 1999. "Exporting and Productivity," NBER Working Papers 7135, National Bureau of Economic Research, Inc.
    14. 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.
    15. 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.
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    Cited by:

    1. Moisă ALTĂR & Ana-Maria CAZACU, 2016. "Testing Self-Selection And Learning By Exporting Hypotheses. The Case Of Romania," ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, Faculty of Economic Cybernetics, Statistics and Informatics, vol. 50(1), pages 5-22.
    2. Piotr Gabrielczak & Tomasz Serwach, 2014. "The Link between Firm-Level Productivity and Decisions to Export," Theory Methodology Practice (TMP), Faculty of Economics, University of Miskolc, vol. 10(01), pages 3-8.

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    Keywords

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    JEL classification:

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

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