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

by exporting, either through organisational learning or economies of scale. Therefore,
we provide estimates for the whole of the market-based economy (both manufacturing
and services) to consider: i) the extent to which exporters have higher total factor
productivity (TFP), when compared to non-exporters; ii) whether exporters are more
productive prior to entry into overseas markets and/or whether post-entry there is also
a ‘learning-by-exporting’ effect.

We use a weighted FAME database to obtain a distribution representative of the
population of firms operating in the UK. The weights are obtained from the ARD (at
the level of 3-digit industry SIC by 5 size bands), as the FAME database is
unrepresentative of small- to medium-sized enterprises and therefore cannot produce
results that can be generalised to the UK level. In particular, our main results for firms
in 16 separate UK industry groups (covering 1996-2004) confirm that in general
exporters have higher productivity relative to non-exporters: in the year prior to
selling in overseas markets, firms that export are older; have higher (labour)
productivity; and exploit intangible assets. In testing the ‘learning-by-exporting’
effect, we find that post-entry productivity gains are present but by no means
universal (even within industry groups there are differences amongst export entrants,
exitors, and those that experience both entry and exit). Nevertheless, in terms of the
overall estimate for the UK economy the results show that there is a fairly substantial
post-entry productivity effect.

Thus our results confirm the predictions from the international entrepreneurship
literature (see Harris and Li, 2005, for a review): no matter whether the traditional,
incremental models of internationalisation, transaction cost models, or monopolistic
advantage models are considered, a strong overlapping feature is the role and

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