Does firm size affect learning-by-exporting? Empirical evidence from Sub-Saharan Africa

Abstract

This study examines whether the relationship between exports and productivity growth differs across firm size. Using panel data from three Sub-Saharan African countries, I use propensity score matching procedure to examine this relationship. This study finds evidence of productivity differences between new exporters and non-exporters confirming the empirical regularity that new exporters are more productive than never exporters. The findings indicate that export participation effects vary across firm size, with both small and large firms experiencing immediate and significant productivity gains upon entry. However, the productivity gain for large firms is highly significant and more pronounced in the first two years after entry but declines drastically from the third year and tends towards negative in subsequent years. Learning effects might be important for large firms during the initial years of exporting, but these effects dissipate once learning avenues have been exhausted. Small firms display sustained learning effects that expand beyond the fourth year. Relative to the large firms, small new exporters display sustained and significant productivity growth for five year. This study finds no evidence of cumulative productivity growth beyond the third year for large firms. These results are robust to alternative measure of productivity. Any export-led growth should be directed at helping small new exporters access the export markets.