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The direction of causality between exports and firm performance: microeconomic evidence from Croatia using the matching approach

Author

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  • Miljana Valdec

    (Croatian National Bank, Zagreb, Croatia)

  • Jurica Zrnc

    (Croatian National Bank, Zagreb, Croatia)

Abstract

This paper contributes to the literature by using propensity score matching to test for causal effects of starting to export on firm performance in Croatian manufacturing firm-level data. The results confirm that exporters have characteristics superior to those of non-exporters. In the main sample specification there is pervasive evidence of self-selection into export markets, meaning that firms are successful years before they become exporters. Using multiple firm performance indicators, panel and cross section data models together with various sample specifications there is scant evidence on learning-by-exporting which holds true only in a few cases. On the other hand, higher sales growth is found to be a more conclusive distinguishing characteristic of new exporters. As in similar studies, we find that a part of the results depends on the number of export starters in the estimation sample.

Suggested Citation

  • Miljana Valdec & Jurica Zrnc, 2015. "The direction of causality between exports and firm performance: microeconomic evidence from Croatia using the matching approach," Financial Theory and Practice, Institute of Public Finance, vol. 39(1), pages 1-30.
    • Handle: RePEc:ipf:finteo:v:39:y:2015:i:1:p:1-30
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    Cited by:

    1. Biljana Jovanovic, 2020. "Export and firms' performance in North Macedonia: self selection or learning by doing?," Working Papers 2020-01, National Bank of the Republic of North Macedonia.
    2. Issam Abdo Ahmad & Ali Fakih, 2022. "Does the legal form matter for firm performance in the MENA region?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(1), pages 205-227, March.
    3. Valerija Botric, 2016. "Public vs. private sector wage skill premia in recession: Croatian experience," Working Papers 1607, The Institute of Economics, Zagreb.
    4. Tomislav Galac, 2015. "Microeconomic Aspects of the Impact of the Global Crisis on the Growth of Non-financial Corporations in the Republic of Croatia," Working Papers 44, The Croatian National Bank, Croatia.
    5. Biljana Jovanovic, 2020. "Export and firms’ performance in North Macedonia: self selection or learning by doing?," Working Papers 2020-00, National Bank of the Republic of North Macedonia.

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    More about this item

    Keywords

    exports; learning-by-exporting; propensity score matching; productivity; self-selection;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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