Detecting Learning by Exporting

Learning by exporting refers to the mechanism whereby a firm’s performance improves after entering export markets. This mechanism is often mentioned in policy documents, but many econometric studies have not found corroborating evidence. I show that the econometric methods rely on an assumption that productivity evolves exogenously. I show how to accommodate endogenous productivity processes, such as learning by exporting. I discuss the bias introduced by ignoring such a process, and show that adjusting for it can lead to different conclusions. Using micro data from Slovenia, I find evidence of substantial productivity gains from entering export markets. (JEL D22, D24, D83, F14, L25)