Does export performance improve firm performance? Evidence from Indonesia

Deasy Pane and Arianto Patunru

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: ‘Learning-by-exporting’ hypothesis suggests that once a firm enters a foreign market, its productivity will increase thanks to the exposure to new knowledge and experience abroad. We test this hypothesis using Indonesia’s firm level data from 2000 to 2012. The methodology involves scrutinizing the learning process of exporters by incorporating ‘export age’ – the number of years engaged in exporting activities – as an explanatory variable in the model. We find that exporter’s total factor productivity increases with export age, but not linearly. Furthermore, larger exporting firms and those in particular industries undergo a clearer learning process. However, even though export experience can boost productivity, it is only applicable for firms that have high productivity from the beginning, supporting the ‘self-selection’ hypothesis.

Keywords: Indonesia; learning-by-exporting; Indonesia; export performance; productivity (search for similar items in EconPapers)
JEL-codes: F12 F14 L23 L25 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2019
New Economics Papers: this item is included in nep-eff, nep-int, nep-sbm and nep-sea
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2019-05

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