Exporting and firm level productivity differentials evidence from Tanzania manufacturing firms

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University of Dar es Salaam
This study set to investigate the productivity differentials between exporting and non-exporting firms in Tanzania using data on a sample of manufacturing firms and applying appropriate econometric techniques. The basic idea is that more productive firms self-select into export markets and exporting firm’s gains from global markets through learning-by-exporting (knowledge and technology inflows, economies of scale). We use two panel datasets, the earlier one for the years 2000 to 2002 and the recent ones for years 2006 and 2013, to allow for spatial heterogeneity. We employ two step procedures, the first involve firm level productivity estimation using Cobb-Douglas Production function and the second step involves testing for productivity differential between exporting and non-exporting firms, controlling for observed firms heterogeneity. The analysis based on descriptive statistics and estimation results yield useful insights. The study finds that exporters are large and more productive than those firms that solely produce for domestic markets, thus exporters are different from non-exporters. To check for reliability (sensitivity) of these results, we use partial productivity measures defined as output per worker and value added per workers. The results also show that the productivity premium of exporting firms comparing to non-exporting firms still holds. The study also finds that innovations, skill intensity, capital intensity and credit sources are noteworthy element in determining firm’s level productivity, and given trade openness productivity have increased significantly over time. Thus, to enhance higher productivity, low income countries like Tanzania should continue with their efforts to promote exports, liberalize their economy and remove non-tariff barriers to trade.
Available in print form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HD9738.T34H66)
Manufacturing industries, Exports, Tanzania
Hongoli, J. (2015) Exporting and firm level productivity differentials evidence from Tanzania manufacturing firms, Master dissertation, University of Dar es Salaam, Dar es Salaam