Trade and productivity in British Firms: 2005 to 2022

Trade matters. There is indisputable evidence across countries that firms that participate in international markets are more productive. But literature is less clear as to why. What are the mechanisms driving the trade-productivity premia observed in the data? To investigate this, we use an innovative dataset originally developed by Wales et al. (2018), which combines administrative data on trade in goods with survey data on firm labour productivity. We extend this dataset to include trade in services and updated trade in goods information between 2017 and 2022. This dataset, covering the 2005 to 2022 period, allows us to build the most comprehensive picture of British traders and to, not only estimate the most up-to-date relationship between trade and productivity but also to disentangle the role of self-selection of productive firms into exporting, from other causal impacts of trade on productivity via, for instance, technological upgrading or learning-by-doing.