Abstract
Abstract This paper explores the link between exports and total factor productivity (TFP) in Brazilian manufacturing firms over the period 2000–2008. The Brazilian experience is instructive as it is a case of an economy that expanded aggregate exports significantly, but with stagnant aggregate TFP growth. The authors first estimate firm-level TFP under alternative assumptions (exogenous and endogenous law of motion for productivity) following Wooldridge’s (On estimating firm-level production functions using proxy variables to control for unobservables, 2009) GMM procedure. In turn, they use stochastic dominance techniques to assess whether the ex-ante most productive firms are those that start exporting (selfselection hypothesis). Finally, they test whether exporting boosts firms TFP growth (learningby- exporting hypothesis) using matching techniques, to control for the possibility that selection into exports may not be a random process. Their results confirm the self-selection hypothesis and show that starting to export yields an extra TFP growth that emerges since a firm’s first year of exporting but lasts only one year. Further, this extra TFP growth is much higher under the assumption of an endogenous law of motion for productivity, which reinforces the importance of accounting for firm export status to study the evolution of productivity.
Highlights
Over the past 30 years, growth in Brazil has been characterized by periods of stagnation punctuated by short bursts of moderate growth
With the exception of 2010, when a rebound from the 2008-9 financial crisis produced growth of 7.5 percent, growth averaged little less than 2 percent annually. This sluggish long-term growth of the Brazilian economy appears to be underpinned by low productivity growth, in spite of the economic reforms implemented since the late 1980s and early 1990s, which included a notable opening of the economy to international trade
We find, in general, that both exporters are more productive than non-exporters and that the most productive firms self-select into export markets
Summary
Over the past 30 years, growth in Brazil has been characterized by periods of stagnation punctuated by short bursts of moderate growth. The growing international evidence in favor of the self-selection hypothesis (following Bernard and Jensen, 1999) has substantially modified the approach to test for the potential post-entry effects of exporting In this sense, more recent studies recognize that new exporters have many of the characteristics to become exporters (as compared to non-exporters) and, selecting into exporting is not a random process (i.e., only the higher productivity firms enter into the export markets). In order to assess the impact, on the export-productivity link for Brazilian manufacturing firms, of considering export status in TFP estimation, we should compare our main results (Model 2) with the ones obtained when restricting the functions HE and FE to be identical for exporters and non-exporters (Model 1). Our data set would not allow us to distinguish properly between firm death, survey non-response, etc
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