Self-selection and learning-by-exporting hypotheses: micro-level evidence

The purpose of this paper is to investigate the self-selection (SS) and learning-by-exporting (LBE) hypothesis. That is, this paper examines the reverse causality between innovation, productivity and exporting. Previous studies have neglected the empirical analysis of the SS and LBE hypotheses using firm level data on 29 countries from Eurasia and Central and Eastern European (CEE) firms. Regression results have supported the SS and LBE hypotheses using the Crepon–Duguet–Mairesse (CDM) model. In addition, the innovation by exporting hypothesis asserts that innovation proxies (product/process, R&D and organizational innovation) positively influence the export performance. These results are robust across Eurasian and CEE firms. Moreover, foreign owned firms are more productive, and innovative and have a greater tendency to export than domestic firms because they are superior in terms of technology and management capabilities. Regarding policy implications, economic policies must target the economic integration between Eurasian and CEE firms through improvements in innovation, productivity and export performance.