Do African Manufacturing Firms Learn from Exporting?

Abstract

We use firm-level panel data for the manufacturing sector in four African countries to investigate whether exporting impacts on efficiency, and whether efficient firms self-select into the export market. Based on simultaneous estimation of a production function and an export regression, our preferred results indicate significant efficiency gains from exporting, which can be interpreted as learning by exporting. We show that modelling unobserved heterogeneity by a flexible approach is important for deriving this conclusion. A policy implication of our results is that Africa would gain from orientating its manufacturing sector towards exporting.

Learning by Exporting or Self Selection? Which Way for the Kenyan Manufacturing Firms?

“…Likewise the results are in support of the self selection hypothesis that is more productive firms are likely to self select into exporting. The results are in conformity with those obtained by Bigsten et al, (2002), on relationship between productivity and exporting in SSA.…”

Export Behavior and Firm Productivity in German Manufacturing: A Firm-Level Analysis

“…Only when limiting their sample to young firms do they find some evidence for learning effects. On the other hand, Kraay (1999) and Bigsten et al (2002) find evidence for learning effects for China and several Sub-Saharan African countries, respectively. Castellani (2001) finds that Italian firms with a very high exposure to foreign markets experience learning effects, while below this threshold export intensity this is not the case.…”

“…With an increasing availability of longitudinal data at the firm level, it has been widely documented for a number of countries, both developed and developing. Micro-evidence on this issue is now available for the United States Jensen 1999, 2001), for Chile (Pavcnik 2002), Taiwan and Korea (Aw et al 2000), for Colombia, Mexico and Morocco (Clerides et al 1998), Japan (Head and Ries 2003), Spain (Delgado et al 2002), Italy (Castellani 2001), the German state of Lower Saxony Wagner 2001, Wagner 2002), as well as Thailand, Indonesia, the Philippines and Korea (Hallward-Driemeier et al 2002), Britain (Girma et al 2004), China (Kraay 1999) and sub-saharan Africa (Bigsten et al 2002). 4 The empirical literature finds a robust positive correlation between productivity at the firm level and exporting.…”

Should Africa Industrialize?

“…Bigsten et al (2004) find that, controlling for selfselection, African firms enhance their productivity by around 9 per cent per year if they export. The public policy implications of learning by exporting are straightforward but powerful.…”