The name is absent

The simultaneity bias consistent estimates of the production function’s parameters,
obtained for each macro sector, have then been used to calculate each firm’s Hicks-
neutral TFP as residual between actual and predicted output values. In order to make the
TFP estimates comparable across industries, the exponential values of TFP were divided
by the corresponding year and industry average²⁹.

Table 5 reports descriptive statistics on the performance variables calculated dividing the
sample according to their trade practices. Both the TFP Index and the natural logarithm
of TFP show that exporters, importers and firms engaged in international networks are
on average more productive than firms that rely on the domestic market as source of
inputs and/or destination of output.

Table 5 Relationship with performance

5.1.1 Profitability

Before proceeding with the analysis it must be observed that theoretical production
functions explain quantities of output trough quantities of inputs. However, in empirical

²⁹ To mitigate the problem of misreporting and outliers we used as industry-year TFP average the Huber
mean truncating the one percent tails of the distributions.

15

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