Learning by exporting with a dose-response function

TL;DR

This paper uses a dose-response function to analyze how varying levels of export intensity causally affect firm productivity, revealing a non-linear relationship with benefits emerging after 60% export revenue.

Contribution

It introduces a novel application of dose-response functions to measure the causal impact of export intensity on productivity and firm innovation, accounting for heterogeneity among firms.

Findings

Non-linear relationship between export intensity and productivity.

Significant productivity gains only after 60% export revenue.

Exporting correlates with increased patent filing propensity.

Abstract

This paper investigates the causal effect of export intensity on productivity and other firm-level outcomes with a dose-response function. After positing that export intensity acts as a continuous treatment, we investigate counterfactual productivity levels in a quasi-experimental setting. For our purpose, we exploit a control group of non-temporary exporters that have already sustained the fixed costs of reaching foreign markets, thus controlling for self-selection into exporting. Our findings reveal a non-linear relationship between export intensity and productivity, with small albeit statistically significant benefits ranging from 0.1% to 0.6% per year only after exports reach 60% of total revenues. After we look at sales, variable costs, capital intensity, and the propensity to filing patents, we show that, before the 60% threshold, economies of scale and capital adjustment offset each other and induce, on average, a minimal albeit statistically significant loss in productivity of about 0.01% per year. Crucially, we find that heterogeneous export intensity is associated with the firm's position on the technological frontier, as the propensity to file a patent increases when export intensity ranges in 8%-60% with a peak at 40%. The latest finding further highlights that learning-by-exporting is linked to the building of absorptive capacity.