International Trade and Productivity: Firm-Level Evidence from Ukraine

Type Report
Title International Trade and Productivity: Firm-Level Evidence from Ukraine
Author(s)
Publication (Day/Month/Year) 2010
URL http://core.ac.uk/download/pdf/6448672.pdf
Abstract
The paper empirically assesses microeconomic exporting-productivity nexus using the data for Ukrainian manufacturing and service sectors for the years 2000-2005. The results of the estimation show that firms with higher total factor productivity (TFP) levels in the period prior to entry are much more likely to enter export markets. Also age, size and intangible assets of the firm have significant positive influence on the probability of exporting. In testing learning-byexporting effect I employ propensity score matching to address issues of endogeneity and sample selection. When the estimation is done for the whole universe of firms in the dataset, the results go in line with common trends and suggest significant positive post-entry productivity effect for the firms that enter export markets for the first time (in the t, t+1 and t+2 periods). At the industry level the results also confirm the presence of learning-by-exporting effect in most of the industries under study. However the effect is not universal and varies between different types of exporting firms. These findings have important implications for the formation of industrial policies, suggesting that government programs designed to upgrade firms’ productivity and innovative capabilities would increase the ability of domestic firms to overcome foreign market barriers as well as assimilate further benefits arising from exporting, which can further enhance international competitiveness of Ukrainian firms.

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