Does Learning-by-exporting Affect Manufacturing Competitiveness of Firms in Nigeria?

Abstract

The unimpressive state of the Nigerian manufacturing sector underscores the need for policy actions to improve the performance of the sector. This is reflected by the harsh innovation environment which constrains learning and capability building in the sector. Using firm-level Enterprise Survey Panel Data for 2007, 2009, 2014 and 2015, the study profiles forms of learning available to firms by exporting and investigates manufacturing competitiveness in the sector. Data was analysed using descriptive statistics, Dynamic Panel Model (DPM) via Ordinary Least Squares (OLS) and General Method of Moments (GMM). A Manufacturing Competitiveness Index (MCI) was computed using Principal Component Analysis (PCA). The competitiveness priorities used to explain firms’ competitiveness are firms’ total costs, quality standards, and goods delivery time. The OLS and GMM estimations show that exporting lagged by one period (t-1) is positive and statistically significant in relationship with competitiveness. Learning-by-exporting is positively associated with competitive performance of firms and the lagged learning variables (skill, technology and training) were positive but not statistically significant for the OLS estimation. However, training was positive in the GMM estimates. These results imply that manufacturing firms in Nigeria are not competitive because they are not learning substantially. The findings also provide evidence that the sector is still less competitive in priority areas of quality, costs of operation, and delivery time.