Exporting raises firm productivity: Bank of Israel paper
A Bank of Israel paper, published on Wednesday, finds evidence that exporters in Israel are more productive than non-exporters.
Lior Gallo, the paper's author, uses data on Israeli manufacturing firms from 1996 to 2003 to estimate the relationship between exporting and productivity. In order to analyse the difference in performance between exporters and non-exporters, the author explores the causal link between export status and firm performance.
Gallo finds that the total factor productivity of exporting firms in Israel is higher than that of non-exporters, in line with existing literature that says exporters are more productive than non-exporters.
The author also finds an additional premium for firms after they have entered the export market, which is suggestive of a learning-by-exporting effect, with growth in the productivity of exporting firms approximately 12% five years after they enter the export market.
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