Does Exporting Lead to Better Performance ?

Exporting involves sunk costs, so some firms export whilst others do not. This proposition derives from a number of models of firm behaviour and has been exposed to microeconometric analysis. Evidence from the latter suggests that exporting firms are generally more productive than non-exporters; they self-select in that they are more productive before they enter export markets; but entry does not make them any more productive. This paper investigates exporting and firm performance for a large panel of UK manufacturing firms applying, for the first time, matching techniques. We find that exporters are more productive and they do self-select. In contrast to other evidence, however, we also find that exporting further increases firm productivity. Outline