Learning by exporting: the role of competition

Deasy D. P. Pane and Arianto Patunru

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

Abstract: This paper finds that increased competition in export markets could reinforce firms’ learning-by-exporting processes. We investigate competition as a learning channel by employing 25 years’ worth of Indonesian garment firms’ data. Firms in this labour-intensive industry experienced a long period of a quota regulation under the Multi-Fibre Arrangement (MFA), which governed much of the global trade in garments before its abolition in 2005. This allows us to conduct a quasi-natural experiment type of study on how the MFA affected apparel exporters’ performance. Using propensity score matching and difference-indifference methods, we find that the impact of exporting on total factor productivity during the MFA implementation period is mixed; but after it was abolished, productivity increased by more than 12 percent. This implies that exporters gain a significant learning-by-exporting benefit from competition (that is, without a special facility such as the MFA), and that interventions that protect exporters from such competition might lessen the benefit.

Keywords: learning-by-exporting; total factor productivity; MFA; developing countries (search for similar items in EconPapers)
JEL-codes: D22 D24 F13 F14 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2020
New Economics Papers: this item is included in nep-int 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:2020-03

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