Exporting and Productivity: The Effects of Multi-Market and Multi-Product Export Entry

Most of the empirical studies on the micro-level effects of exporting on productivity pay little attention to the potentially heterogeneous effects of the different modes of export market entry. We study how productivity of firms is affected by export entry simultaneously into several markets or export entry with several export products, and compare these to the entry into fewer markets or the entry with fewer products. Our analysis is based on detailed export data from firms in Estonia, disaggregated for each firm by export markets and individual products. We show that the early stage entry into several export markets or with several products leads to higher growth in productivity, compared with entry into only one foreign market or with only one product. This implies significant benefits from experimentation with different markets and different products.