Export Destination and Firm Upgrading: Evidence from Spain

Akin A. Cilekoglu ()
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Akin A. Cilekoglu: AQR-IREA Research Group, University of Barcelona, Spain.

No 202306, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

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.

Keywords: Exports; Firm upgrading; Market destination; Exchange rate. JEL classification: D22; F14; O14; F31. (search for similar items in EconPapers)
Pages: 32 pages
Date: 2023-05, Revised 2023-05
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:202306

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