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Right arrow D24 - Production; Cost; Capital and Total Factor Productivity; Capacity
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© 2000 International Bank for Reconstruction and Development / The World Bank

research-article

Productivity and Turnover in the Export Market: Micro-level Evidence from the Republic of Korea and Taiwan (China)

Bee Yan Aw, Sukkyun Chung, and Mark J. Roberts

the Department of Economics at Pennsylvania State University byr{at}psu.edu
the Ministry of Finance and Economy of the Republic of Korea schung{at}mic.go.kr
the Department of Economics at Pennsylvania State University and the National Bureau of Economic Research (NBER) mroberts{at}psu.edu

Widespread empirical evidence indicates that exporting producers have higher productivity than nonexporters, although the reasons why are unclear. Some analysts argue that exporters acquire knowledge of new production methods, inputs, and product designs from their international contacts, and with this knowledge they achieve higher productivity than their more insulated domestic counterparts. Others argue that the higher productivity of exporters reflects the self-selection of more efficient producers into a highly competitive export market. This article analyzes the link between a producer's total factor productivity and its decision to participate in the export market, using manufacturing data from the Republic of Korea and Taiwan (China).

Differences are found between these two economies in the importance of selection and learning. In Taiwan (China) transitions of plants into and out of the export market reflect systematic variations in productivity as predicted by self-selection models. In Korea there are no significant changes in productivity following entry or exit from the export market that are consistent with learning from exporting. A comparison of the two economies suggests that in Korea factors other than production efficiency are more prominent determinants of the export decision.


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