Exporting raises productivity in sub-Saharan African manufacturing firms

Exporting raises productivity in sub-Saharan African manufacturing firms

2005 | Johannes Van Biesebroeck
Exporting increases productivity in sub-Saharan African manufacturing firms. This study uses panel data from nine African countries to show that exporters are more productive than non-exporters, and their productivity advantage grows after entering the export market. While some studies suggest that productivity differences are due to self-selection, this research finds that exporting also leads to productivity gains. The results are robust across different econometric methods, showing that exporters gain 25-28% in productivity. Scale economies are a key factor, as firms can exploit larger markets and benefit from increased production. However, credit constraints and contract enforcement issues prevent firms from fully utilizing these economies. African firms often face small domestic markets and poor credit systems, limiting their ability to scale. The study also finds that exporters have higher wages, larger scale, and more capital. The results suggest that exporting helps firms improve productivity, especially in African economies where domestic markets are limited and credit is scarce. The findings highlight the importance of exporting for productivity growth in sub-Saharan Africa.Exporting increases productivity in sub-Saharan African manufacturing firms. This study uses panel data from nine African countries to show that exporters are more productive than non-exporters, and their productivity advantage grows after entering the export market. While some studies suggest that productivity differences are due to self-selection, this research finds that exporting also leads to productivity gains. The results are robust across different econometric methods, showing that exporters gain 25-28% in productivity. Scale economies are a key factor, as firms can exploit larger markets and benefit from increased production. However, credit constraints and contract enforcement issues prevent firms from fully utilizing these economies. African firms often face small domestic markets and poor credit systems, limiting their ability to scale. The study also finds that exporters have higher wages, larger scale, and more capital. The results suggest that exporting helps firms improve productivity, especially in African economies where domestic markets are limited and credit is scarce. The findings highlight the importance of exporting for productivity growth in sub-Saharan Africa.
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Understanding Exporting Raises Productivity in Sub-Saharan African Manufacturing Plants