Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 10-13: Learning by Exporting, Importing or Both? Estimating productivity with multi-product firms, pricing heterogeneity and the role of international trade

Valérie Smeets () and Frédéric Warzynski ()
Additional contact information
Valérie Smeets: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, FRICHSHUSET , Hermodsvej 22, 1st and 2nd floors , DK 8230 Aabyhoej, Denmark
Frédéric Warzynski: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, FRICHSHUSET , Hermodsvej 22, 1st and 2nd floors , DK 8230 Aabyhoej, Denmark

Abstract: In this paper, we analyze the relationship between exporting/importing status and firm productivity. We use a rich product-firm-level dataset providing both revenue and quantities of all products for a large panel of Danish manufacturing firms over the period 1998-2005 and link it to another dataset describing firms’ international trade transactions by product. We use our detailed product level information to compute a firm level deflator and avoid the criticism of biased estimates due to the use of industry level deflator. We find that both importing and exporting behaviours are strongly associated with productivity, but firms involved in both importing and exporting are the most productive. We also find evidence of a self-selection into importing and exporting but no learning effect. Finally, we try to distinguish between cost effect and product quality effect by analyzing the importance of the origin of imports and the destination of exports. We find that both imports from countries with abundant and cheap labor like China and from countries with similar level of development matter, although the mechanism through which productivity is affected is likely to be different. In addition, exporting to more distant OECD economies is more strongly associated to productivity than exporting to neighboring or other EU countries, especially when controlling for the price specific effect

Keywords: no; keywords

JEL-codes: F10

22 pages, October 1, 2010

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