Export and productivity in global value chains: Comparative evidence from Latvia and Estonia

Konstantins Benkovskis, Jaan Masso, Olegs Tkacevs, Priit Vahter and Naomitsu Yashiro

No 2018/03, Working Papers from Latvijas Banka

Abstract: This paper investigates the effect of export entry on productivity, employment and wages of Latvian and Estonian firms in the context of global value chains (GVCs). Like in many countries, exporting firms in Latvia and Estonia are more productive, larger, pay higher wages and are more capital-intensive than non-exporting firms. While this is partly because firms that are originally more productive and have better performances are more likely to enter exports, Latvian and Estonian firms also realise more than 23% and 14% higher labour productivity level respectively as the result of export entry. Export entry also increases employment and average wages. Gains in productivity and employment are particularly large when firms enter exports that are related to participation in knowledge-intensive activities found in the upstream of GVCs. For instance, Latvian firms that start exporting intermediate goods or non-transport services (which include knowledge-intensive services) enjoy significantly higher productivity gains than those starting to export final goods or transport services. These findings underscore the importance of innovation policies that strengthen firms' capabilities to supply highly differentiated knowledge-intensive goods and services to GVCs.

Keywords: productivity; global value chain; exports; Latvia; Estonia (search for similar items in EconPapers)
JEL-codes: F12 F14 O19 O57 (search for similar items in EconPapers)
Date: 2018-06-20
New Economics Papers: this item is included in nep-cis, nep-int, nep-sbm and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Export and productivity in global value chains: comparative evidence from Latvia and Estonia (2020)
Working Paper: EXPORT AND PRODUCTIVITY IN GLOBAL VALUE CHAINS: COMPARATIVE EVIDENCE FROM LATVIA AND ESTONIA (2018)
Working Paper: Export and productivity in global value chains: Comparative evidence from Latvia and Estonia (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ltv:wpaper:201803

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