Reuben Hernandez-Murillo writes about the characteristics of U.S. exporters in the St. Louis Fed's August National Economic Trends: U.S. Exporters: A Rare Breed.
He notes that relatively few U.S. firms are involved in exporting: in 2000, out of 5.5 million U.S. firms, only 4% export, and 10% of these account for about 96% of exports.
He goes on to point out that exporters are distinctive. Compared to firms that don't export: they have higher value-added per worker, higher total factor productivity, ship larger volumes of products, use more skilled labor, use more capital, use more advanced technology, pay higher wages, and are more innovative.
Data indicates that exporting firms have higher productivity, but not higher productivity growth, implying that it is the more productive firms that begin to export. High entry costs to the export sector may deter less productive firms. Exporting firms do appear to have more rapid growth in employment and output.
Reducing the costs of entering export markets can lead to an increase in aggregate productivity within the economy:
Andrew Bernard and J. Bradford Jensen, along with coauthors, argue that the higher initial productivity of exporters, combined with higher output and employment growth after entry, suggests an important role for trade liberalization (a reduction of trade barriers) in improving the aggregate productivity of the economy. The reason is that a reduction in trade barriers would improve the profits of existing exporting firms and would reduce the initial productivity level necessary for additional firms to enter the export market. This additional entry would, in turn, generate an increased demand for labor and therefore higher wages. Low-productivity non-exporting firms would be forced to exit the industry, and both capital and labor factors would be reallocated from the less efficient non-exporting firms to the more efficient exporting firms. This would increase average productivity in the industry. Because the reallocation of factors occurs both within and across industries, this would translate into productivity gains for the entire economy.
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