Do domestic and foreign exporters differ in learning by exporting? Evidence from China

In view of the importance of intra-firm trade and export-platform FDI conducted by multinationals, we investigate how domestic firms and foreign affiliates exhibited differential impacts of export entry and exit on productivity changes. Using a comprehensive dataset from China's manufacturing industries, we employ the Olley-Pakes method to estimate firm-level TFP and the matching techniques to isolate the impacts of export participation on firm productivity. Robust evidence is obtained that domestic firms displayed significant productivity gains (losses) upon export entry (exit), whereas foreign affiliates showed no evident TFP changes. Moreover, the productivity gains for domestic export starters were more pronounced in high- and medium-technology industries than in low-technology ones. We explain our findings from the perspective of the technology gap theory after considering processing trade and the fragmentation of production stages in the era of globalization.

► We investigate the impacts of export entry and exit on firm productivity. ► Chinese domestic firms display significant productivity gains (losses) upon export entry (exit). ► Foreign multinationals' affiliates in China show no evident productivity changes upon export entry and exit. ► TFP gains of domestic export starters are more pronounced in high and medium-technology industries than in low-technology ones. ► Technology gap, processing trade and fragmentation of production stages account for differential patterns of learning-by-exporting effects.