FIRM EXPORTS AND PERFORMANCE: EVIDENCE FROM SERBIA

Milan Čupić and Stefan Vržina

University of Kragujevac, Faculty of Economics, the Republic of Serbia

Despite exports having been the subject of academic attention for decades, associating exports with firm performance is unclear. Previous studies have produced two opposite theories. The learning-by-exporting hypothesis states that exports improve firm performance due to knowledge transfers from foreign markets to exporters, on the one hand, whereas on the other, those advocating the self-selection hypothesis argue that firms with better financial performance are more likely to export. This paper aims to examine the relationship between exports and the performance of firms in Serbia. The results of this research study show that exports are statistically significantly associated with productivity, this finding being robust to changes in the productivity measure and the sample size. Associating exports with firm profitability, however, is sensitive to changes in profitability measures. In addition, the research results are more typical of the manufacturing sector. Several reasons for the poor performance of Serbian exports and several recommendations with respect to that are offered in this paper.

Keywords: international trade, exports, productivity, profitability, Serbia

JEL Classification: F14, F23, M21