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Scope for export-led growth in a large emerging economy: Is India learning by exporting?

Author

Listed:
  • Tabrizy, Saleh S.
  • Trofimenko, Natalia

Abstract

The ongoing debate of the literature on learning-by-exporting is whether the conspicuously stellar performance of exporters relative to non-exporters can be, at least partially, attributed to the horizonwidening interaction with foreign consumers and learning of cost-efficient and quality enhancing production methods, or whether all of the differential is due to the self-selection of best firms into exporting. This study uses data from the 1998-2008 Prowess Database to examine how firm-level productivity paths differ between firms with varying degrees of exposure to international trade in India, the country to rank third among the most dominant economies by the year 2050. Having used Levinsohn-Petrin measure of total factor productivity and a proxy for labor productivity, we find significant ex-ante differences in productivity between exporters and non-exporters and no difference in the ex-post productivity gains. These findings suggest that even in a large emerging economy with strong absorptive capacity and a significant catch-up potential, learning-by-exporting effects are nonexistent. Rather, self-selection of more productive firms into exporting explains the productivity differential between exporters and non-exporters.

Suggested Citation

  • 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).
  • Handle: RePEc:zbw:ifwkwp:1633
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:quaeco:v:68:y:2018:i:c:p:46-62 is not listed on IDEAS
    2. 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.
    3. Cebeci, Tolga, 2014. "Impact of export destinations on firm performance," Policy Research Working Paper Series 6743, The World Bank.

    More about this item

    Keywords

    Trade; total factor productivity; exports; export-led growth; learning by exporting;

    JEL classification:

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

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