The Timing of Learning by Exporting: An Empirical Investigation on Ethiopian Large and Medium Manufacturing Firms

ABSTRACT This paper analyzes the link between export and total factor productivity using a large panel of Ethiopian large and medium manufacturing firms. Using a modified Olley and Pakes model with export for the prediction of total factor productivity and then matching and difference‐in‐difference techniques, evidence of both self‐selection and learning by exporting for Ethiopian manufacturing firms is found. The learning by exporting effect is shown to persist over time and start even before a firm actually exports, which presumably reflects the firm's efforts to meet the requirements of its newly acquired foreign client(s) before supplying them.