How Knowledge Assets Affect the Learning-by-Exporting Effect: Evidence Using Panel Data for Manufacturing Firms

Abstract

Using panel data from Korean manufacturing firms, this study empirically investigates how knowledge assets impact the relationship between exports and productivity. We consider a scenario in which firms are situated in a globally competitive, knowledge-based environment. We establish a dynamic panel vector autoregressive model by considering the outcomes of various panel framework tests. A generalized method of moments estimator is employed to test the dynamic relationships among the variables, and a post-estimation test, Granger causality test, and impulse response test are performed. Our findings indicate the existence of a learning-by-exporting effect on the enhancement of total factor productivity (TFP). The result show that TFP can be improved by interacting with exports and knowledge assets, and that firms’ knowledge assets significantly and positively affect their exports. However, industry competition, as an external force, does not contribute to boosting firms’ productivity. We highlight the importance of continuously upgrading productivity, exports, knowledge assets, and industry competition by demonstrating that the present levels of these elements serve as the main source of their own future values. Finally, the implications of our results are outlined.