Is there any empirical evidence that firms become more efficient after becoming exporters? Do firms that become exporters generate positive spillovers for domestically-oriented producers? In this paper we analyze the causal links between exporting and productivity using firm-level panel data from three semi-industrialized countries. Representing export market participation and production costs as jointly dependent autoregressive processes, we look for evidence that firms' stochastic cost processes shift when they break into foreign markets. We find that relatively efficient firms become exporters, but firms' unit costs are not affected by previous export market participation. So the well-known efficiency gap between exporters and non-exporters is due to selfselection of the more efficient firms into the export market, rather than learning by exporting, Further, we find some evidence that exporters reduce the costs of breaking into foreign markets for domestically oriented producers, but they do not appear to help these producers become more efficient.

Is there any empirical evidence that firms become more efficient after becoming exporters? Do firms that become exporters generate positive spillovers for domestically-oriented producers? In this paper we analyze the causal links between exporting and productivity using firm-level panel data from three semi-industrialized countries. Representing export market participation and production costs as jointly dependent autoregressive processes, we look for evidence that firms' stochastic cost processes shift when they break into foreign markets. We find that relatively efficient firms become exporters, but firms' unit costs are not affected by previous export market participation. So the well-known efficiency gap between exporters and non-exporters is due to selfselection of the more efficient firms into the export market, rather than learning by exporting, Further, we find some evidence that exporters reduce the costs of breaking into foreign markets for domestically oriented producers, but they do not appear to help these producers become more efficient.

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