Entry and Survival in the Export Market: Spillovers from Foreign and Outward-Looking Domestic Firms in Ethiopia

Abstract

This paper examines spillovers from domestic-exporting and foreign-owned firms to the export entry and exit of local manufacturing firms in Ethiopia for the period 1996-2010. We find that downstream and upstream foreign-owned exporting firms improve the probability of domestic firms’ entering into export markets. Besides, foreign-owned exporting firms generate intraindustry spillovers that increase the export entry and survival rates of local firms. Spillovers from domestic exporters enhance the exporting likelihood of firms in input-supplying sectors. Moreover, exporting domestic and foreign-owned firms generate backward productivity spillovers that advance the export entry and survival of domestic firms through productivity gains.