Export-market dynamics and firm-level productivity: Evidence for UK tradable sectors

This study empirically assesses the microeconomic productivity impact associated with export-market transitions, providing the first analysis for the whole tradable economy for the UK. Using weighted firm-level data for both UK production and service sectors covering the 1996–2004 period, and based on estimation for 14 industry groups separately, our findings show that a productivity effect resulting from UK firms entering and exiting export markets is present in many industries but it is not universal. Our overall estimate for the UK economy suggests a substantial postentry productivity gain for firms new to exporting; a negative productivity effect for firms exiting overseas markets; and significant productivity gains for those that are observed to have both switched into and out of export markets. We also find that such productivity effects are larger in the services, when compared to production (the latter encompassing agriculture, manufacturing, and construction).