Export mode, Trade Costs, and Productivity Sorting

Ronald Davies and Tine Jeppesen

No 201225, Working Papers from School of Economics, University College Dublin

Abstract: In this paper we directly test the proposed productivity hierarchy of direct, indirect and non-exporters using firm-level data from 105 developing and transition countries. Using both regression analysis and propensity score matching, we find strong evidence to suggest that direct exporters are on average more productive than both indirect and non-exporters. However, only the results obtained using regression analysis support a similar ranking between indirect and non-exporters. Furthermore, we test the underlying relationship between source-specific fixed trade costs and the average productivity differences between the three firm-types. We find a significant and positive relation between such costs and the average productivity premium of direct exporters only. While other studies have shown that exports by trade intermediaries increase with destination-specific fixed costs, our results suggest that this is also true for source-specific costs, as an increase in the average productivity of direct exporters indicate that a larger share of less productive direct exporters choose to make use of a trade intermediary as export costs rise.

Keywords: Heterogeneous firms; Export mode; Exporting costs; Industrial productivity; Exports; Costs, Industrial (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-eff and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://hdl.handle.net/10197/3878 First version, 2012 (application/pdf)

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Working Paper: Export Mode, Trade Costs, and Productivity Sorting (2012)
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