Atkin, Khandelwal, Osman (2017)

Question 1

What was Atkin, Khandelwal, Osman (2017) about?

What are the findings of the paper?

Answer 1

Paper studies the effect of exporting on firm’s productivity using a randomized control trial with Egyptian rug producers.

We find that profits for treatment firms increase 16–26% relative to control. This finding stands in contrast to many RCTs designed to alleviate supply-side constraints that have shown limited impacts on profits. Thus, our profit results suggest that demand-side constraints may be a critical barrier to firm growth in developing countries and can be mitigated through market access initiatives.

Question 2

What are the limitations of Atkin, Khandelwal, Osman (2017) ?

Answer 2

1. External validity
2. Matches are not endogenous
3. Extensive vs intensive margins of export – paper只看了要不要export的意义（extensive margin），没看export数量的意义
   * * *

Question 3

How does the paper generate exogenous variation in which firms have access to foreign markets?

Answer 3

1. Generate international orders for rugs.
2. Randomly assign orders to non-exporting domestic firms.
3. Follow up orders possible.

Question 4

How does treatment differ from an increase in domestic demand?

Answer 4

Both are positive demand shocks but foreign buyers demand on average higher quality.

Question 5

The authors find that treatment firms report higher profits than control firms. Suggest three hypotheses that could explain this finding.

Answer 5

• (i) Demand ↑ → profits ↑ if margins stay the same
• (ii) Foreigners demand higher quality (higher willingness to pay, less elastic demand)
• (iii) Learning by exporting

Question 6

In Atkin, Khandelwal, Osman (2017), Table IX shows that the treatment reduced simple measures of firm-level productivity. How does the paper reconcile this finding with the increase in profits?

Answer 6

Not quality adjusted – once adjusted for quality, treatment increases output per hour and factor productivity significantly.

Question 7

In Atkin, Khandelwal, Osman (2017), The quality-upgrading observed for treatment firms could be explained by a move along the production possibilities frontier or a shift of the production possibilities frontier. Why does it matter?

Answer 7

1. Shift along the PPF: Firms knew how to produce higher quality but chose not to. Export demand raises the price of quality. Firms substitute (→ gains from specialisation).
2. Outwards shift in PPF: Trade causes productivity gains. (→ additional gains from trade)

Question 8

Atkin, Khandelwal, Osman (2017) could not conclude whether increase in profit was due to learning-by-exporting (不确定paper 是不是这么说的). However, there is 5 pieces of evidence supporting learning-by-exporting. they are？

Answer 8

1. conditional on product specifications, we observe large improvements in both quality and productivity.
2. when asked to produce an identical domestic rug, treatment firms produce higher-quality rugs and do not take longer to do so.
3. we observe learning curves among the firms who took up the opportunity to export.
4. we document knowledge flowing between foreign buyers, the intermediary, and the producers, with quality increasing most along the specific dimensions that the knowledge pertained to.
5. we find no evidence that firms make monetary or time investments in upgrading, or pay, even implicitly, for the knowledge they receive. Taken together, the evidence indicates that learning-by-exporting is present in our data and that the learning occurs, at least in part, through information flows. Given that this learning is induced by demand for high-quality products from knowledgeable buyers in high-income countries, these changes would likely not have occurred as a result of increased market access to domestic markets.