Exporting and productivity: A firm-level analysis of the Taiwan electronics industry

Based on the panel data of Taiwanese electronics firms, this paper explores the relationship between exporting and productivity. Contemporaneous levels of exports and productivity are indeed positively correlated. The causality tests show causality from productivity to exporting and vice versa, implying that self-selection and leaming-by-exporting effects coexist in the Taiwan electronics industry, while the leaming-by-exporting effect is less supported. Exporting also has a positive impact on the productivity growth of firms, while the effect diminishes gradually after entering foreign markets. Decomposing the productivity growth shows that the reallocation effect accounts for only 20 per cent compared to the own-effect share of 80 per cent, which is mostly contributed by firms that continually export.