Does Export Yield Productivity and Markup Premiums? Evidence from the Japanese manufacturing industry

This paper examines the relationship between productivity, markups, and development of foreign markets using a rich firm-level dataset of the Japanese manufacturing industry during the period 2000-2010. Using estimates of firm-specific productivity and markups, we investigate if the development of foreign markets through exports has a premium for their market performance. Our study confirmed that exports have significant productivity and markup premiums. In addition, export premiums vary across the destination markets. Exports to Asia show a significant productivity premium while other markets do not. For markups, exports to Asia and North America have a significant premium. These findings imply that both productivity and markups should be considered in assessing the development of foreign markets.