Exports, Productivity and Factor Intensity: Evidence for Brazilian Firms

Abstract

Based on the theory of heterogeneous firms, participation in the international market leads to changes in performance and efficiency gains at the firm level. This article uses microdata at the level of firms of the Brazilian manufacturing industry (2007-2014) to investigate the impacts of exporting on the productivity trajectory and intensity of factors. The empirical strategy, via Differences in Differences, explores the fact that firms enter at different moments into the external market, generating a variation in the period and in the intensity of the permanence. The results evidence learning effects and the use of comparative advantages so that firms that start exporting have an immediate productivity growth of around 5% and an instantaneous decrease in capital intensity (2.3%) in relation to the pre-entry period compared to non-exporting firms in the comparison group. The permanence on the activity intensifies the effects, so that, after four periods, the growth (reduction) in productivity (intensity of capital) is, approximately, 12% (15%). Among the sources of heterogeneities investigated, the magnitude of effects varies in dimensions such as size, technological intensity and pre-entry levels of productivity and capital intensity.