Exports are an effective way for developing countries to accelerate growth but there is mixed evidence on the extent to which exports reduce poverty and generate knock-on effects throughout the local economy, and little is known about what determines the export performance of firms in developing countries. This research project randomly provided small-scale enterprises in Egypt with the opportunity to sell their products such as ceramics and textiles in foreign markets. This enabled the researchers to study how exports drive economic growth and reduce poverty.
The research answers three questions:
- First, does exporting cause an increase in productivity and positively affect household outcomes? And if so, how?
- Second, based on data on a range of factors associated with entrepreneurial success such as skills, education and risk aversion, do exports favour the entrepreneurially minded?
- Finally, what are the knock-on effects from exports?
Many of the countries in which the IGC works rely on small-scale enterprises to provide jobs for a substantial portion of the population living at or below the poverty line. Export promotion policies that expand these enterprises could, therefore, offer a way to help share growth evenly among the population. By examining the effects of trade on small-scale enterprises, the researchers hope to obtain the results directly relevant for the goal of poverty reduction.