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

learning through internal and external channels, so as to enhance its competency base
and performance. Thus, the learning-by-exporting proposition is consistent with this
literature on business internationalisation. Indeed, positive learning effects for firms
engaged in exporting have been identified, particularly where different econometric
methodologies are adopted (e.g. Kraay, 1999; Castellani, 2002; and Hallward-
Driemeier et. al., 2002). What is more, a strand of the literature also documents
evidence on the co-existence of selection and learning effects, such as Baldwin and
Gu (2003), Girma et. al. (2004) and Greenaway and Yu (2004).

Arguably the empirical evidence still remains inconclusive with respect to the causal
mechanisms underlying the well-established empirical association between export
orientation and productivity growth, in particular whether the learning-by-exporting
hypothesis holds. Nevertheless, there may be several explanations to account for such
discrepancies amongst the empirical literature in this area. Above all, there are
structural differences between various databases used when testing for learning effects.
For instance, in explaining distinct learning effects in Canadian and American plants,
Baldwin and Gu (2004) put forward the following factors that might lead to more
effective learning activities in Canadian plants: a smaller market size with less intense
competition; benefits from greater product specialisation and longer production runs
when expanding into much larger foreign markets relative to the domestic market, and
relative importance of learning from international best practices to productivity
growth, as the principal source of raising productivity in the US is technology
developed domestically.

Secondly, the heterogeneity of export markets may also play a role in determining the
extent to which participants will gain higher productivity from exporting. For instance,
Damijan et. al. (2005) suggest that exporting per se does not warranty productivity

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