Working Paper: NBER ID: w8894
Authors: Mary Hallward-Driemeier; Giuseppe Iarossi; Kenneth L. Sokoloff
Abstract: This paper uses new firm level data from five East Asian countries to explore the patterns of manufacturing productivity across the region. One of the striking patterns that emerges is how the extent of openness and the competitiveness of markets affects the relative productivity of firms across the region. Firms with foreign ownership and firms that export are significantly more productive, and the productivity gap is larger the less developed is the local market. We exploit the rich set of firm characteristics available in the database to explore the sources of export firms' greater productivity. We argue that it is in aiming for export markets that firms make decisions that raise productivity. It is not simply that more-productive firms self-select into exporting; rather, firms that explicitly target export markets consistently make different decisions regarding investment, training, technology and the selection of inputs, and thus raise their productivity.
Keywords: Exports; Manufacturing Productivity; East Asia; Firm-Level Data
JEL Codes: O3; O1; O4; F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| foreign ownership (F23) | productivity (O49) |
| export orientation (F01) | productivity (O49) |
| decision to export (F10) | productivity (O49) |
| less developed local markets (R33) | productivity gap (exporters vs non-exporters) (O49) |