Do firms learn by exporting or learn to export? Evidence from Senegalese manufacturing firms

Abstract

This paper examines the causal relationship between exporting and productivity in the manufacturing firms in Senegal using a unique firm-level panel data for the period 1998-2011. We control for endogeneity and sample selection by jointly estimating the productivity and the export-participation equations. Our results indicate strong evidence of both self-selection of the most efficient firms enter into the export market and effect of Learning in the export market. Findings show that firms with better financial health are likely to exports. Furthermore, the ownership of intangible assets like brevet and the quality of labour positively affect the probability to export of the manufacturing firms. We investigate the sectoral heterogeneity of the Learning-by exporting effect (LBE) and find evidence of a weak heterogeneity of the learning-by-exporting effect between the sectors. From a policy relevance, the evidence of learning-by-exporting suggests Senegal has much to gain from encouraging exports by helping domestic firms to overcome the barriers to enter into foreign markets by promoting access to intangible assets like brevet. Particularly, export promotion policies could be helpful, reducing the level of financial constraints faced by firms and indirectly enhancing their investment spending and productivity. As a driver of manufacturing exports, labour quality must be carefully considered in the perspectives of industrial development. Considerable efforts are required in the Senegalese educational system in order to match the training to the requirements of the labour market.