The Export-Productivity Link in Services: An Empirical Test for the Netherlands

Abstract

The paper tests the predictions of models of international trade with heterogeneous firms. The results based for the services industry cor- respond with most of the prediction. Exporting firms are more productive than comparable non-exporting services firms, by several productivity measures. In a dynamic context, the prediction that exporters self select into export markets on the basis of the relative productivity performance is confirmed by the empirical evidence. There is no support for the alterna- tive 'learning-by- exporting' explanation for the productivity performance of services firms, not even when correcting for the distance to the interna- tional productivity frontier. The results for services are compared to those for manufacturing. This shows some remarkable differences with respect to the control factors. On the basis of this I sketch some suggestions for refining the trade model. Finally, the paper briefly sketches some policy implications.

Keywords: international trade; services; heterogeneous firms; Netherlands

JEL Classification: F1; F14; D22