Learning-by-Exporting? Firm-Level Evidence for UK Manufacturing and Services Sectors

Learning by Exporting? Firm-Level Evidence for UK
Manufacturing and Services Sectors

Abstract

This study empirically assesses the microeconomic exporting-productivity nexus for
both the UK manufacturing and services sectors during 1996-2004, based on a
weighted FAME dataset. Our results show that firms that are older, that possess
intangible assets or that have higher (labour) productivity in the year prior to
exporting, are significantly more likely to sell overseas. In testing the post-entry
‘learning-by-exporting’ effect, we employ three approaches to controlling for
endogeneity and sample selection, viz. instrumental variables, control function and
matching, and find that this effect is present in many industries but not universal, and
also varies amongst different types of exporting firms. Our overall estimate for the
UK economy suggests a substantial post-entry productivity effect for firms new to
exporting; a negative effect for firms exiting overseas markets; and large productivity
gains while exporting for those that both enter and exit.

JEL codes: D24; F14; L25; R38

Keywords: exports; control function; GMM; matching; TFP; sample selection

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