Learning from Exporters: Establishment-level Productivity Spillovers in Colombia

Abstract:

Different strands of literature have highlighted the effects of trade linkages and participation in the international markets on the productivity of firms and countries. While most of the micro-level studies in this field focuses on the impact of international trade on the productivity of internationally active firms, we tackle a related but less explored question, namely whether and how firms only serving domestic markets are affected by horizontal and vertical linkages to exporters. Making use of establishment-level data on a sample of manufacturing firms in Colombia for the period 2001-2011, we assess the effect of exporters in the same industry and in vertically related ones on the growth of total factor productivity (TFP) of establishments that are exclusively domestic-oriented. Using an identification strategy which leverages the entry of China in the WTO, our analysis indicates the existence of productivity-enhancing spillovers from backward linkages to exporters. We further expand our analysis by considering the role of absorptive capacity and free trade zones (FTZs) in Colombia.

Joint with: Jacopo Timini (Banco de Espana)