Exports, Investment and Production Growth : A Dynamic Heterogeneous Firm Model with Learning and Entry Costs

We analyze a fi rm's joint decision to export and invest using a model that incorporates the essential features of self-selection and learning-by-exporting theories of fi rm-level dynamics. We calibrate the model to 2002-07 Chilean manufacturing plant data and simulate it under different assumptions, finding that neither self-selection nor learning-by-exporting alone can adequately explain the observed cross-sectional relationship between firm level exports and capital, favoring instead a model that allows both mechanisms to work in tandem