"Exporting and Productivity Growth: Evidence from the Taiwan Electronics Plants", Scottish Journal of Political Economy, 55(2), 190-209, (SSCI)

Although there is a consensus in the literature that exporting firms are more productive than non-exporting firms, there is still active debate about the direction of causality. Some studies find that more productive firms self-select to export, while others find that firms learn productivity through interacting with foreign firms during the process of exporting. This study uses Taiwanese government data to test the self-selection hypothesis versus the learning-by-exporting hypothesis in the local electronics industry. Employing both propensity score matching techniques and ordinary least squares regressions, we find strong evidence for the self-selection hypothesis, but little support for the learning-by-exporting hypothesis. The weakness of the learning-by-exporting effect may be due to the relatively diffuse nature of Taiwanese production. Exporting firms prefer to sub-contract production to smaller firms rather than invest in R&D. This inhibits exporting firms from taking advantage of their access to advanced foreign production techniques. If this hypothesis is correct, then the Taiwanese government should develop policies aimed at encouraging exporting firms to invest in production research. Such policies will induce exporting firms to adopt more efficient production methods and help Taiwanese firms maintain international competitiveness.