The role of investments in export growth
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In an increasingly globalised world, exporting plays a central role for economic growth and poverty reduction, particularly in small open economies. In this study, we test the hypothesis that a rise in investment favours entry into export markets and increases exports among firms that are already exporting. We address causal links through impact evaluation techniques for observational data. We examine the binary case and also continuous analysis of investment as treatment. We analyse a panel of Uruguayan manufacturing firms in the period 1997–2008, and we find evidence that investments “cause” exports and export orientation, and this provides a rationale for carefully designing investment promotion policies rather than focusing on other export support policies.
KeywordsExports Investments Firm-level data Treatment effect models
JEL ClassificationsF1 D21 C21
I would like to thank Guillermo Lezama, Andres Rius, the editor and two anonymous referees for their useful comments and suggestions, and also the participants of the XII Arnoldshain Seminar. I am also indebted to Jagadeesh Sivaradan for providing the Stata code for productivity estimation. The usual disclaimer applies.
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