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A Study of the Heterogeneous Effects of Globalization on Firm Productivity

Author Inchul Kim, Youngmin Kim, Sunin Jung, Hanhin Kim Date 2017.09.27 Page 39
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The purpose of this paper is to estimate the effect of globalization (export in particular) on firms’ productivity distribution and then to suggest policy implication to improve government’s export promotion policies. We consider the two long―standing issues in the globalization and productivity literature: heterogeneity among firms and endogeneity between globalization and productivity, which distinguishes our study from the existing ones, by employing instrumental variables and quantile regression methods.
In the empirical analysis, we found statistically significant evidences that export has a positive effect on productivity for all exporting firms regardless of their location in the productivity distribution and that the effect of globalization on productivity becomes bigger as the productivity quantile becomes lower. The first finding implies export promotion policies can induce firms to higher productivity than otherwise. The second implies a firm with lower productivity can obtain relatively bigger productivity gain by engaging in export markets if only it successfully survives the market.