Growth through export: evidence from Iran’s manufacturing plants

Abstract

Purpose

Does the long-term growth rate of a firm increase by exporting? If yes, how large is that increase in a developing economy? The paper aims to discuss this issue.

Design/methodology/approach

The authors incorporate data from the manufacturing plants in Iran as a developing economy for 2003–2011 to address this question. Using fixed effect panel and propensity score matching method, the authors examine whether exportation can affect a firm’s growth rate to test for the learning to grow hypothesis.

Findings

The findings document that: not only the exporters are larger and more productive than non-exporters, but they also grow faster in size and productivity measures as well. Additionally, the authors find that the rise in the growth rate is a short-term phenomenon and it disappears in the second year; meaning that exportation does not have a permanent growth effect. The findings are consistent with a spot effect of learning, compared to a permanent growth engine. Results are robust to different analysis tests.

Originality/value

The authors investigate the learning effect of exporting within recently released firm-level data of a developing country.

Citation

Yousefi, K., Madnanizdeh, S.A. and Sobhani, F.Z. (2020), "Growth through export: evidence from Iran’s manufacturing plants", Journal of Economic Studies, Vol. 47 No. 1, pp. 111-131. https://doi.org/10.1108/JES-08-2018-0269