Mapping export status changes and firm productivity: Evidence from EAC countries

This study tests whether firms in the EAC that supply in the foreign markets are in line with the learning by exporting hypothesis, in view of the differing performance indicators between exporters and non-exporters in these economies.
The data for this study is constructed from the World Bank Enterprise Survey for four EAC countries (Tanzania, Kenya, Uganda and Rwanda) between 2006 and 2013. Similar to other studies, the study finds a statistically significant performance difference in terms of labour productivity and average wage between exporting and non-exporting firms, which implies a premium for firms that sell in international markets. In addition, exporters exhibit higher growth of labour productivity relative to non-exporters, which is further evidence of learning by exporting. Comparison of the learning effectiveness between domestic and foreign owned firms indicates that domestically owned firms learn more from exporting than foreign owned firms; and that learning effects accumulate with time.
These results suggest that governments in these countries should design policies to promote export (such as promotion of EPZs, conducive investment climate and establishment of EPAs) so that many firms can participate in international trade and tap the export premium.