Working Paper 191 - Do Firms Learn by Exporting or Learn to Export: Evidence from Senegalese Manufacturers’ Plants

The increasing number of literatures investigating on the impact of trade openness on firm efficiency has not yet provided a definite prediction on the direction of causality (Rodrik, 1988, 1992, and Tybout 1992). We investigate the relation between exporting and productivity on the Senegalese manufacturing sectors. Using a unique firm-level panel data for the period 1998-2011, we estimate productivity and exporting dynamics, controlling for other unobserved effects, using simultaneous functions based on Bigsten and al. (2002). Our results indicate the evidences of both self-selection of the most efficient firms enter into the export market and effect of Learning in the export market. Our findings suggest that workers’ qualification and access to Patents and Licences have a positive effect on the process of learning. Also, small firms particularly learn more from exporting. From a policy perspective, this evidence of learning-by-exporting suggests that Senegal has much to gain from promoting its manufacturing sector towards exporting by supporting domestic firms to overcome the barriers to enter into foreign market, particularly by investing on skilled workers and promote access to Patents and Licences as well as disseminating benefits arising from exporting to non-exporters.