Productivity and Export Performance: Micro-Level Evidence from the Manufacturing Sector in Nigeria

This paper investigates how productivity influences firms' exports. Various firm characteristics are employed to test the self-selection hypothesis alongside the effects of firms' productivity on their share of exports in total sales. Using a pseudo-panel data set constructed from the firm-level data for the manufacturing sector in Nigeria, we find no evidence that higher productivity influences the decision on whether or not a firm would participate in exports. However, it is established that higher productivity increases the share of exports in total sales of firms that are already participating in foreign markets. A policy implication of our result is that Nigeria can realize a larger share of manufactured exports in total merchandise exports by directing efforts towards improving primarily the productivity of firms that are already involved in exports.