Spillover Effects of ExportsinManufacturing Industries Sector: The Case of Iran

Exports of goods and services could be considered as an important factor that contribute to the productivity of different sectors of the economy. The effects of exports on firm’s productivity in similar stage of the production chain known as horizontal spillovers and the effects of exports on firm’s productivity in other sectors is called vertical spillovers. The vertical spillovers occur through forward and backward linkages between thesectors. Meanwhile, human capital in different sectors could enhance or intensify the spillover effects of exports. In this paper, we examine the impacts of exports onproductivity using a panel data of firms inthe Iranian manufacturing sector for the period 2001-2014. The productivity of factors of production is first estimated by applying the growth accounting method, and then productivity is treated as a function of horizontal and vertical spillovers of exports as well as human capital and imports. The findings show that exports cause positive horizontal spillover effects, however, its impactimproves withincreasing the level of human capital. Furthermore, our results illustrate that vertical spillover effects through forward linkages is negative and insignificant, but it is positive and significant through backward linkages.