...we have just completed a randomised control trial on rug manufacturers in Egypt to examine the channels through which exporting affects the performance of firms....coupled with very detailed data collection, [which] allows us to identify the causal impacts of exporting on firm performance.
Specifically, we provided a subset of small rug producers the opportunity to export handmade carpets to high-income markets. To provide this opportunity, we partnered with a US-based non-governmental organisation and an Egyptian intermediary to secure export orders from foreign buyers through trade fairs and direct marketing channels. With orders in hand, we surveyed a sample of several hundred small rug manufacturers located in Fowa, Egypt. A random subsample of these firms was provided with an initial opportunity to fill these orders by producing 110m2 of rugs (approximately eleven weeks of work). As in any standard buyer-seller relationship, firms were offered subsequent orders provided they were able to fulfil the initial orders to the satisfaction of the buyer and intermediary.Rather than search for statistical data that might be lying around!
We find that the opportunity to export raises firm profits by between 15 and 25%, depending on the profit measure. .... These increases in profits are accompanied by large improvements in product quality....
These findings are suggestive of quality upgrading where buyers in high-income countries demand high quality rugs that are slower to produce.Which the carpet manufacturers learn by exchange. They found a need, and filled it. No magic needed.