Factors driving the firms decision to export. Firm-level evidence from Poland

Jan Hagemejer

MPRA Paper from University Library of Munich, Germany

Abstract: The model by Melitz (2003) predicts that if firms differ in their productivity (TFP) and there exists a fixed costs of entry to export markets, firms begin exporting if productivity exceeds a certain threshold value. Productivity is thus a crucial factor behind firms' export market participation. To verify this, I estimate a simple probit model of the firms decision to export, based on the Polish manufacturing firm-level data. Estimation of productivity of individual firms is troublesome as the standard OLS method produces biased estimates due to the endogeneity of factor choice. I use a multi-stage semi-parametric approach, as proposed by Olley and Pakes (1996) controlling for endogeneity and the bias caused by firms exiting and entering the sample during the period under consideration. Besides determining the significance of the TFP coefficient in the probit regression, I examine the paths of productivity of firms entering the export market and make an attempt to identify the potential learning-by-exporting effects.

Keywords: productivity; exports; firm-level data (search for similar items in EconPapers)
JEL-codes: D21 F10 F14 L60 (search for similar items in EconPapers)
Date: 2007-06-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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