ESSAYS ON FOREIGN TRADE, PRODUCTIVITY AND LABORMARKET EFFECTS OF THE MANUFACTURING SECTOR

Chapter 1 Exports and Firm Productivity in Ethiopian Manufacturing Firms Abstract This study examines productivity and exporting dynamics by using unbalanced long panel dataset in the period 2000-11 for Ethiopian export-oriented three two-digit medium and large manufacturing firms. Our results indicate the presence of evidences of both self-selection and learning-by-exporting. The results are robust with different productivity measures and across various specifications. By going beyond the previous literature, this study reveals that export participation has a statistically insignificant impact on technical efficiency and scale change components of total factor productivity (TFP) change. Last but not least, it is imperative that, designing policies orienting exporting firms towards reducing poor production practice by better using the available technological know-how and improvement in the production environment is necessary to be more beneficiary from export participation. Keywords: Productivity, self-selection, exporting, learning by exporting, Panel data Chapter 2 Financial Constraints, Foreign Trade, and Firm Survival in Ethiopia: Evidence from manufacturing firm Data Abstract We use unbalanced firm-level data over the period 2000-2011 for the Ethiopian context to assess the effects of financial and global engagement variables on firms’ survival probability. We examine whether firms at different stages of export activity (starters, exiters, continuers, switchers) react differently to changes in financial variables by using Probit and Cox proportional hazard models. In general, export starters and exiters experience much stronger adverse effects of financial constraints on their survival prospects. By contrast, the exit probability of continuous exporters is less negatively affected by financial characteristics. The results are robust to alternative model specification and data set. Keywords: Survival, exporting, financial constraints, Cox proportional, panel data Chapter 3 Global engagement and labor market effects: Evidence from Ethiopian Manufacturing Firms Abstract This paper analyses the effect of exposure to international trade and foreign ownership on the employment quality (workforce composition) and wages in manufacturing industries. This study used the unbalanced long panel dataset of Ethiopian manufacturing firms over the period 2000–2011 and deploying alternative econometric estimation technique (OLS, FE, and GMM-SYS) by estimating dynamic models of employment and wages. The results show that firms’ international exposure has a positive contribution to employment creation and wage growth in Ethiopian manufacturing. This affirms the fact that Ethiopian’s exports are more labor-intensive and this has mitigated the country’s labor surplus. Besides, trade and foreign ownership are found to have an absolute quality-bias which affirms the presence of learning by exporting on the Ethiopian manufacturing sector. We also found that Foreign Direct Investment (FDI) magnifies the wage gap between casual and permanent workers. Whereas export participation has a positive, but no significant effect on the wage of permanent workers, while it has a weakly positive significant effect on casual workers’ wage. Keywords: International trade, employment, wage, foreign ownership, panel data