Self‐selection vs learning: evidence from Indian exporting firms

The purpose of this paper is to study whether exporting firms outperform non‐exporting firms along a number of performance characteristics. It also examines whether the differences in performance characteristics are due to the self‐selection of better firms into exporting or because the firms that start exporting for some unknown reason experience productivity growth.

The dataset comprised a panel of Indian manufacturing firms for a period of 17 years from 1990 to 2006.

Exporters were found to systematically outperform non‐exporters over a number of characteristics. Also, evidence was found of “self‐selection”, that is, firms that are more productive enter the export market. There was some evidence of learning, that is exporting firms experience an increase in productivity.

This is the first paper to look at the issue of self‐selection vs learning for exporting firms using a dataset from India.