Firm Level Productivity and Exporting in the Uganda’s Manufacturing Sector

The role of exports in helping attain and sustain high rates of growth especially in the context of developing countries cannot be overemphasized. Exports usually tend to be associated with both static gains (resulting for instance from access to larger outside markets) as well as dynamic gains (including learning from exporting and productivity gains). With regard to the dynamic gains from trade, two propositions have tended to dominate the literature. The first relates firm level productivity and exporting and its basic thesis is that more productive firms tend to ”self select” themselves to compete in the global trading arena. The second line of argument dwells on the argument that in view of limited experience in the export business as well as the significant technological gaps faced by potential exporters from most of the developing world, there is a lot of scope to ”learn by exporting”. Once a firm succeeds in penetrating the export market, chances that it will sustain itself in the export business increase owing to interaction with (and learning from) other players along the export chain as well as the dictates of consumers’ tastes and preferences in the importing counties. This paper tests the selfselection and learning by exporting hypotheses using data from Uganda’s manufacturing firms. We employ proxies of self-selection and learning by exporting obtained from indices of path dependence to fit maximum likelihood estimates of export behaviour.