Ownership, Technology and Buyers: Explaining Exporting in China and Sri Lanka

Abstract

This paper examines several characteristics besides foreign ownership that influence the decision of clothing firms in China and Sri Lanka whether or not to export - namely, the acquisition of technological capabilities and learning from buyers. As a by-product of the exercise, the model also describes the effect of other explanatory variables (capital, skill adjusted wages and age). The findings indicate that foreign ownership, the acquisition of technological capabilities and learning from buyers are positive and significantly correlated with the probability of exporting in Chinese and Sri Lankan clothing firms. Skill adjusted wages are also significant and with the expected negative sign. Comparative econometric analysis is a powerful tool to verify and extend the findings of detailed enterprise case studies on innovation and learning processes in developing countries.

Keywords: Foreign investment, technological capabilities, buyers of output, exports, China, Sri Lanka

JEL Classification: F14, O31, L67