Study Overview
This study asks if firms become more productive by learning through exporting. We do so by estimating production functions using a panel dataset of Indonesian manufacturing establishments from 1990 to 1996. In contrast to previous studies of more developed countries, we find strong evidence that firms experience a jump in productivity of about 2% to 5% following the initiation of exporting. The timing of the performance improvement suggests learning from exporting rather than just self-selection of better firms into export markets.
Study Results
We find strong evidence that Indonesian firms experience a jump in productivity by 2% to 5% upon entering export markets, which we interpret as a learning effect. Our results differ with the majority of earlier studies that found evidence of selection of better firms into export markets but no evidence of learning. One explanation for the difference could be Indonesia’s relatively low level of development in comparison to the more technologically advanced economies examined in earlier work.