Export Market Exit and Performance Dynamics: A Causality Analysis of Matched Firms

GEP Working Paper No. 2003/07

12 Pages Posted: 11 Jun 2003

See all articles by Sourafel Girma

Sourafel Girma

Nottingham University Business School

David Greenaway

University of Nottingham - School of Economics

Richard Kneller

University of Nottingham

Date Written: May 2003

Abstract

As a result of the rapid growth of microeconometric studies of exporting firms, we now know quite a lot about the performance dynamics of firms that enter export markets. We know much less about what happens to performance when firms exit. We apply a difference-in-differences methodology based on matched firms to analyse the performance dynamics firms in UK manufacturing that exited export markets during the period 1991-1997. We find that, on average, exit from foreign markets has a negative albeit weak effect on total factor productivity. But this is confined to the year of exit as we fail to detect any discernible productivity effect due to exit in subsequent years. By contrast exit is found to have a deleterious effect on both employment and output dynamics. The effect on output is sizeable and quite persistent, suggesting that domestic demand was not able to make up for the loss in foreign market shares.

Keywords: exporting, productivity

JEL Classification: F14

Suggested Citation

Girma, Sourafel and Greenaway, David and Kneller, Richard, Export Market Exit and Performance Dynamics: A Causality Analysis of Matched Firms (May 2003). GEP Working Paper No. 2003/07. Available at SSRN: https://ssrn.com/abstract=408901 or http://dx.doi.org/10.2139/ssrn.408901

Sourafel Girma

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

David Greenaway (Contact Author)

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 951 5469 (Phone)
+44 115 951 4159 (Fax)

Richard Kneller

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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