Export destination and firm upgrading: evidence from Spain

Akin A. Cilekoglu

Journal of Applied Economics, 2024, vol. 27, issue 1, 2427408

Abstract: This paper examines the role of export destinations on firm upgrading. I exploit the real effective exchange rate devaluation in Spain during the Great Recession to identify the unusual export performance of manufacturing firms. Using directly observable measures of firm upgrading, I find that increased share of exports to low-income destinations in sales reduced productivity and upgrading efforts of firms. However, real effective exchange rate devaluation did not affect the share of exports to high-income destinations in sales as well as productivity and upgrading efforts. The results are consistent with the quality sorting hypothesis that suggests a positive relationship between firm productivity and product quality. The findings in this paper emphasize that export market destination is an important determinant in analysing the gains from exporting.

Date: 2024
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DOI: 10.1080/15140326.2024.2427408

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