Exporting Raises Productivity in Sub-Saharan African Manufacturing Plants

44 Pages Posted: 13 Oct 2003

See all articles by Johannes Van Biesebroeck

Johannes Van Biesebroeck

K.U.Leuven; Centre for Economic Policy Research (CEPR)

Date Written: October 2003

Abstract

Proponents of trade liberalization argue that it will force firms to produce closer to the production possibility frontier and that the frontier will move out faster. In particular, plants that export will achieve a higher productivity level. However intuitive the argument, empirical evidence is meager. This hypothesis is examined by calculating the effect of export status on productivity for a panel of manufacturing plants in nine African countries. The results indicate that exporters in these countries are more productive, replicating a similar finding for developed countries. More importantly, exporters increase their productivity advantage after entry into the export market. While the first finding can be explained by selection---only the most productive firms engage in exporting---the latter cannot. The results are robust when unobserved productivity differences and self-selection into the export market are controlled for using different econometric methods. Scale economies are shown to be an important channel for the productivity advance. Credit constraints and contract enforcement problems prevent plants that only produce for the domestic market to fully exploit scale economies.

Suggested Citation

Van Biesebroeck, Johannes, Exporting Raises Productivity in Sub-Saharan African Manufacturing Plants (October 2003). NBER Working Paper No. w10020. Available at SSRN: https://ssrn.com/abstract=457542

Johannes Van Biesebroeck (Contact Author)

K.U.Leuven ( email )

Naamsestraat 69
B-3000 Leuven
Belgium
+3216326793 (Phone)
+3216326796 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/public/N07057/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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