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On Wednesday, July 21, 2010 Center for Global Development hosted a brownbag seminar on Does exporting increase productivity? Evidence from India featuring Megha Mukim, PhD Candidate, London School of Economics. CGD Senior Fellow Michael Clemens moderated the discussion.
Access Mukim's presentation (pdf, 3M).
Abstract: Although there is much empirical evidence to show that more productive firms become exporters, the literature has been inconclusive regarding productivity benefits from exporting. This paper disentangles the direction of the causality to show that exporting improves firm performance. It uses Indian plant-level data (over 1989-2008) for over 20,000 firms across NIC 2-digit product categories, to test for learning-by-exporting effects. I generate measures of total factor productivity by estimating production functions using plant-level physical output data. I follow Olley and Pakes (1996) and use investment to deal with the simultaneity problem. To deal with the problem of self-selection bias, I use propensity score matching techniques and I also use instrumental variables that predict export status but are uncorrelated with unobserved productivity. I model the exporting decision explicitly and jointly estimate it with the production function, and also carry out other robustness checks. This paper contributes to the empirical literature by measuring the effects of learning-by-exporting.