Exports and Productivity: An Empirical Analysis of German and Austrian Firm- Level Performance

This paper studies the relationship between export activities and firm-level productivity. Unique matching of German and Austrian micro data from 1994 to 2003 suggests that exporters are more productive by around 40 percent compared with non-exporters. Moreover, beside other analysis techniques, instrumental variable estimations suggest that exporting causes a rise in firm-level productivity. That is, the annual average growth rate of an exporting firm’s productivity is between about 1 and 1.5 percent higher than that of non-exporters. It allows the conclusion that, against other findings of existing studies, both directions hold: more productive firms self-select themselves into export markets and being active in foreign markets boosts firm-level productivity. JEL classification: D24; F13; F23; L22; L23; O47 This paper is Chapter 3 of my doctoral thesis and I would like to thank the participants of the International Economics Workshop at the University of Munich for helpful comments and stimulating discussions. I am also grateful to my colleagues at the Chair for International Economics. My thanks go also to the Economic Business and Data Center for providing me with a considerable part of the underlying data. In addition, financial support from the Deutsche Forschungsgemeinschaft through SFB/TR15 is gratefully acknowledged.