Performance on Exports: Continuous Productivity Improvements or Capacity Utilization

Following along the lines of a growing literature on the causal link between export- ing and productivity this paper analyzes the existence of flearning-by-exporting using firm-level data. The paper asks whether, in addition to better perfirming firms self-selecting into exports and multinational production, exporting (multina- tional production) further improves their perfirmance compared with non-exporters. We develop and test a simple model of trade and international production with het- erogeneous firms that generates learning effects through competition in the export markets. The estimations perfirmed on the sample of Slovenian manufacturing enter- prises between 1994 and 2002 indicate that more productive firms tend to self-select into more competitive markets, while there is no conclusive evidence of learning-by- exporting. Although new exporters experienced a surge in productivity in the initial year of exports the effect dissipates as soon as the following year. Confronting the data on factor accumulation with TFP measures indicates that the perceived learning effects may in fact only be a consequence of increased capacity utilization brought forth by the opening of an additional market.