Learning-by-Exporting, Introduction of New Products, and Product Rationalization: Evidence from Korean Manufacturing

Chin Hee Hahn 1 , 1
  • 1 Gachon University, chhahn@gachon.ac.kr

Abstract

Utilizing a previously unexplored plant-product matched dataset in the Korean manufacturing sector, this paper examines the impact of exporting on firms’ productivity and the mechanism by which it operates. We find strong evidence for the learning-by-exporting hypothesis. We also find that exporting induces plants to introduce new products and rationalize their products beginning from one year prior to, and until two years after, export market entry. The synchronous responses of product churning and TFP suggest that new-product introduction and product rationalization are indeed one mechanism of the learning-by-exporting effect. Finally, we find that plants increase, rather than decrease, their product scope after exporting, in contrast with the prediction from the recent theories of multi-product firms.

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The B.E. Journal of Economic Analysis & Policy (BEJEAP) is an international forum for scholarship that employs microeconomics to analyze issues in business, consumer behavior and public policy. Topics include the interaction of firms, the functioning of markets, the effects of domestic and international policy and the design of organizations and institutions.

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