In Search of the Learning-by-Exporting Effect: Role of Economies of Scale and Technology

Abstract

This paper studies the learning-by-exporting effect through which a firm increases its productivity by entering into the export market. Using Chinese firm-level data, we show that economies of scale and the choice of production technology play an important role in bridging the gap between exporting and firm performance. By stratifying samples and considering causality, we find that the learning-by-exporting effect is more likely to occur for firms that produce large amounts of outputs to exploit scale economies and, at the same time, are highly capital intensive, so that they can absorb new knowledge and information, which are basically embodied in capital goods, from world markets.