Exporting and Productivity in the United Kingdom

University of Nottingham Research Paper No. 2004/34

23 Pages Posted: 2 Aug 2005

See all articles by Richard Kneller

Richard Kneller

University of Nottingham

David Greenaway

University of Nottingham - School of Economics

Abstract

This paper investigates various aspects of the links between exporting and productivity for a large sample of firms in the United Kingdom. We find evidence to support the preposition that sunk costs are important. Self selection takes place, with larger and more productive firms entering export markets, and firms have to become more productive in order to enter. Industry characteristics also affect the likelihood of entry - both industrial and spatial agglomeration are important. When we rely on an unmatched sample of firms we can find some evidence of further productivity improvement after entry, but this disappears when we use a matched sample. Our results suggest that policy should avoid simply subsidizing firms that may self select into export promotion policies and focus instead on reducing information asymmetries and supporting development of clusters.

Keywords: Exporting, productivity

JEL Classification: F12, F14

Suggested Citation

Kneller, Richard and Greenaway, David, Exporting and Productivity in the United Kingdom. Available at SSRN: https://ssrn.com/abstract=764385 or http://dx.doi.org/10.2139/ssrn.764385

Richard Kneller

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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)

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