Export Markets and Firm Productivity in Sub-Saharan Africa

Abstract

ABSTRACT In this paper, we analyze the significance of export market destinations for productivity growth in Sub-Saharan Africa. We use matching and difference-in-differences techniques to evaluate these questions. We find that exports generate productivity growth among exporters, with the more productive firms exporting to multiple markets. We also find that changes in export markets are as a result of firm-level productivity growth suggesting that firms will sell products to additional markets if their productivity level increases hence the changes in export markets are correlated with productivity growth. Moreover, we find that exporting to multiple markets raises the firm’s productivity growth by 42.3%, higher than exporting to only one export market at a time. These findings hold at the country and industry level and are robust to other factors that may correlate with increased productivity like age, size and ownership. At the policy level, policies on export promotion should provide information on how prospective exporters can enter into African export markets. Firms that have started exporting should be helped with credit access to expand their sales to other additional export markets.