Abstract
This study seeks to examine the determinants of export performance by firms in Lesotho between 2009 and 2016 in two respects: the probability of firm deciding to export ('firm export propensity'); and the proportion of firm sales traded in the international market ('firm export intensity'). The analysis uses firm-level pooled data 2009 and 2016 and applies Heckman’s two stage section model whereby probit model is used to estimate the determinants export propensity and a tobit model to test the determinants of export intensity. The analysis is done using STATA.
The study finds that larger firms, firms with higher foreign ownership and firms that train their employees are more likely to export ('firm export propensity'). The proportion of exports ('firm export intensity') is positively associated with firm size, employee on-the-job training and ownership of international quality certificate. The impact of foreign ownership on export intensity is sensitive to sectoral effects, implying varying economies of scale by sector. The study suggests that firms should consider increasing economies of scale, incorporating foreign investment, as well as ensuring product quality improvement and certification, when formulating export strategy. Policy makers, on the other hand, should intensify strategies that increase foreign direct invest and should also collaborate with firm managers to enhance investment in building human resource capabilities, through on-the-job training.
Keywords: Export Propensity, Export Intensity, Firms, Lesotho.