Firm-Level Investment and Exporting: New Empirical Evidence from Ghana and Tanzania

다국어 초록 (Multilingual Abstract)

Using firm-level data from two selected African countries, we examine whether firm-level investment in physical capital is a possible channel through which less productive firms gain entry into export markets. Our findings reveal that non-exporters who invest in physical capital increase their probability of switching status, from non-exporter to exporter, and we provide evidence that firm-level investment is correlated with increased productivity growth among exporters. Consequently, we emphasize that firm-level investment in physical capital enables non-exporters to increase their odds of entry to export markets and provides opportunity for young exporters to grow rapidly and persist long in export markets. Although firm productivity differences can be explained by self-selection factors as one channel, firm-level investment in physical capital provides another explanation as to why less productive firms gain entry into the export markets. We establish that when firms invest in physical capital, they improve their productive capacity thereby raising their productivity in the process. Export promotion policies should target providing support to firms that seek to upgrade or expand their production technology as this would stimulate the probability of export market entry hence promoting exports.

참고문헌 (Reference)

1 Bustos, B. P., "Trade liberalization, exports, and technology upgrading : evidence on the impact of MERCOSUR on Argentinian firms" 101 (101): 304-340, 2011

2 Eaton, J., "The organization of firms in a global economy’" Harvard University Press 2008

3 Melitz, M. J., "The impact of trade on intra-industry reallocations and aggregate industry productivity" 71 (71): 1695-1725, 2003

4 Roberts, B. M. J., "The decision to export in Colombia: An empirical model of entry with sunk costs" 87 (87): 545-564, 1997

5 Rosenbaum, P. R., "The central role of the propensity score in observational studies for causal effects" 70 (70): 41-55, 1983

6 Constantini, J. A., "The Organization of firms in a global economy" Harvard University Press 2008

7 Holland, P. W., "Statistics and causal inference" 81 (81): 945-960, 1986

8 Luttmer, E. G. J., "Selection, growth, and the size distribution of firms" 122 (122): 1103-1144, 2007

9 Jovanovic, B., "Selection and the evolution of industry" 50 (50): 649-670, 1982

10 Collier, P., "Rethinking Finance for Africa’s Small Firms in “SME Financing in SSA”" Proparco Magazine on Private Secto and Development 2009

11 Aw, B. Y., "R&D investment, exporting, and productivity dynamics" 101 (101): 1312-1344, 2011

12 Doraszelski, U., "R&D and productivity: Estimating endogenous productivity" 80 (80): 1338-1383, 2011

13 Girma, S., "R & D and exporting : A Comparison of British and Irish firms" 144 (144): 750-773, 2008

14 Bernard, A. B., "Plants and productivity in international trade" 93 (93): 1268-1290, 2003

15 Leuven, E. M., "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing" Boston College Department of Economics 2003

16 Richard Ericson, "Markov-Perfect Industry Dynamics: A Framework for Empirical Work" Oxford University Press (OUP) 62 (62): 53-82, 1995

17 Olga A. Timoshenko, "Learning versus sunk costs explanations of export persistence" Elsevier BV 79 : 113-128, 2015

18 Jože P. Damijan, "Learning from Trade through Innovation" Wiley 77 (77): 408-436, 2015

19 Licandro, O., "Innovation, investment and productivity: Evidence from Spanish firms" 2003

20 Jorgenson, D. W., "Innovation and productivity growth" 93 (93): 276-296, 2011

21 Bruno Cassiman, "Innovation and internationalization through exports" Springer Science and Business Media LLC 42 (42): 56-75, 2011

22 Aida Caldera, "Innovation and exporting: evidence from Spanish manufacturing firms" Springer Science and Business Media LLC 146 (146): 657-689, 2010

23 Lileeva, A., "Improved access to foreign markets raises plant-level productivity ... for some plants" 125 (125): 1051-1099, 2010

24 Heckman, J. J., "Handbook of labour economics, Vol. 3A" North-Holland 1865-2097, 1999

25 Youngwoo Rho, "Growing into Export Markets: The Impact of Exporting on Firm-level Investment in Indonesia" Wiley 23 (23): 62-85, 2015

26 Jože P. Damijan, "From Innovation to Exporting or Vice Versa?" Wiley 33 (33): 374-398, 2010

27 Rho, Y., "Firm-level investment and export dynamics" 57 (57): 271-304, 2016

28 Nazar, M. S., "Firm-level determinants of export performance" 8 (8): 105-112, 2009

29 Greenaway, D., "Firm Herterogeneity, exporting and foreign direct investment" F134-F161, 2007

30 Peter Quartey, "Financing the growth of SMEs in Africa: What are the contraints to SME financing within ECOWAS?" Elsevier BV 7 (7): 18-28, 2017

31 Wu, R., "Exports, investment and production growth: A dynamic heterogeneous firm model with learning and entry costs" 24 (24): 1037-1053, 2015

32 Alejandro Riaño, "Exports, investment and firm-level sales volatility" Springer Science and Business Media LLC 147 (147): 643-663, 2011

33 Fukunari Kimura, "Exports, FDI, and Productivity: Dynamic Evidence from Japanese Firms" Springer Science and Business Media LLC 142 (142): 695-719, 2006

34 Ratbek Dzhumashev, "Exporting, R&D investment and firm survival in the Indian IT sector" Elsevier BV 42 : 1-19, 2016

35 Bee Yan Aw, "Export Market Participation, Investments in R&D and Worker Training, and the Evolution of Firm Productivity" Wiley 30 (30): 83-104, 2007

36 Andrew B. Bernard, "Exceptional exporter performance: cause, effect, or both?" Elsevier BV 47 (47): 1-25, 1999

37 Blundell, R., "Evaluation methods for non-experimental data" 21 (21): 427-468, 2000

38 James Levinsohn, "Estimating Production Functions Using Inputs to Control for Unobservables" Oxford University Press (OUP) 70 (70): 317-341, 2003

39 Hopenhayn, H., "Entry, exit and firm dynamics in long run equilibrium" 60 (60): 1127-1150, 1992

40 Ahn, J., "Capacity constrained exporters: Micro evidence and macro implications capacity constrained exporters: Micro evidence and macro implications" 2012

41 Arkolakis, C., "A unified theory of firm selection and growth" 131 (131): 1-49, 2016

42 Stephen Ross Yeaple, "A simple model of firm heterogeneity, international trade, and wages" Elsevier BV 65 (65): 1-20, 2005