Learning-by-exporting in Korean Manufacturing: A Plant-level Analysis

The paper analyzes whether firms that start exporting become more productive utilizing recently developed sample matching procedures to control the problems from self-selection into the export market. We use plant level panel data on Korean manufacturing sector from 1990 to 1998. We find clear and robust empirical evidence in favor of the learning-by-exporting effect; total factor productivity differentials between exporters and their domestic counterparts arises and widens during several years after export market entry. We also find that the effect is more pronounced for firms that have higher skill-intensity, higher share of exports in production, and are small in size. Overall, the evidence suggests that exporting is one important channel through which domestic firms acquire accesses to advanced knowledge and better technology. Also, the stronger learning-by-doing effect for firms with higher skill-intensity seems to support the view that "absorptive capacity" matters to receive knowledge spillovers from exporting activity.