Exports and profitability: a note from quantile regression approach

Abstract

Studies of the linkage between exports and profitability often use mean regression approaches and focus only on European countries. Using a panel data quantile regression approach, this study analyses the linkage between export behaviour and profit growth in Vietnam. Using a panel dataset from 2005 to 2009, our results show an insignificant linkage between export status and firm profit growth when using OLS. However, when using a quantile approach, export participation is found to be positively related to profitability for those firms with high profit growth but negatively related for those firms with low profit growth. This might suggest that the productivity advantages of exporters with low profit growth are absorbed by costs relating to trading activities in overseas markets.