Title

Firm Productivity, Technological Heterogeneity and Endogenous Exports

Document Type

Article

Publication Date

10-10-2017

Publication Title

Working Paper

First page number:

1

Last page number:

26

Abstract

Exporters tend to be more productive than non-exporting firms, and uncovering the extent of these productivity differentials as well as causes thereof has long been one of the core topics in the literature. This paper focuses on the issues pertaining to robust empirical modeling of the intricate endogenous relationship between the firm’s export behavior and its productivity. I provide a new synthesized (nonparametric) methodology for the structural control-function-based identification of unobserved firm productivity in the presence of (i) endogenous self-selection into export markets, (ii) dependence of productivity evolution on the firm’s past export experiences and (iii) potential technological heterogeneity in the production of for-export and for-domestic-sale outputs. The model offers a useful addition to the toolkit of practitioners interested in studying the nexus between firm productivity and export behavior. I showcase the proposed methodology by applying it to the firm-level data on China’s apparel industry, one of the country’s most export-oriented manufacturing sectors, during the 1999–2006 period.

Keywords

Control Function; Export; Production Function; Productivity; Proxy; Selectivity

Disciplines

Business | Operations and Supply Chain Management

Language

English

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