Productivity, Markups and Export Intensity: Evidence from Korean Manufacturing

Abstract

This paper empirically investigates the impacts of export intensity on plant-level productivity growth and markups by assessing Korean manufacturing data between 1992and 2002. Our Generalized Propensity Score estimation results suggest an inverted U-shaped relationship between export intensity and productivity growth, which is consistent with Fryges and Wagner (2007). At the same time, we also find a similar pattern in the export intensity-markup nexus. Our results generally imply that increasing export intensity up to a certain threshold provides a better opportunity for exporters to improve productivity and charge higher markups than non-exporters, but a plant whose export intensity is beyond this threshold may not fully benefit from exporting activity as excessive exposure to foreign markets causes higher market uncertainties and internationalization costs.