## **<u>Table 5 Variable Descriptions</u>**

|**Variable**|**Definition**|
|---|---|
|Export/Import<br>|Dummy variable equal to one if the firm exported any output and imported any<br>intermediate good.|
|Import Only<br>|Dummy variable equal to one if the firm only imported any intermediate good.|
|Export Only|Dummy variable equal to one if the firm only exported any output.|
|None|Dummy variable equal to one if the firm neither imported nor exported any good.|
|Foreign ( ≥ %10)|Dummy variable equal to one if more than 10% of the firm is owned by private<br>foreign individuals, companies or organizations.|
|Foreign ( ≥ %50)|Dummy variable equal to one if more than 50% of the firm is owned by private<br>foreign individuals, companies or organizations.|
|Foreign ( ≤ %50)|Dummy variable equal to one if less than 50% of the firm is owned by private<br>foreign individuals, companies or organizations.|
|Sales|Total annual sales.|
|Salest-3|Total annual sales three years ago.|
|Employment|Number of full time workers.|
|Employmentt-3|Number of full time workers three years ago.|
|Product Innovation|Dummy variable equal to one if the firm introduced onto the market any new or<br>significantly improved products.|
|Process<br>Innovation*|Dummy variable equal to one if the firm introduced any new or significantly<br>improved production processes including methods of supplying services and ways<br>of delivering products.|
|Foreign License*|Dummy variable equal to one if the firm uses technology licensed from a foreign-<br>owned company.|
|Quality Certificate|<br>Dummy variable equal to one if the firm has an internationally-recognized quality<br>certification.|
|R&D Ind|Dummy variable equal to one if the firm spent on research and development<br>activities, within the establishment or other companies contracted.|
|Wage|Total annual cost of labor (including wages, salaries, bonuses, social payments).|
|Investment|Total annual expenditure for purchases of machine, equipment, and building.|
|NonProd Worker<br>Share|The share of non-production workers (e.g., managers, administration, sales) in all<br>workers.|
|Training|Dummy variable equal to one if the firm runs formal training programs for its<br>employees.|
|Age|Survey year minus year the firm started operation|
|Total Hrs/Week<br>Access to Finance|Total number of hours per week that the establishment normally operates<br>Dummy variable equal to one if the firm uses banks or other financial institutions to<br>finance its investments.|
|Capacity<br>Utilization|Firm’s current output in comparison with the maximum output possible using its<br>facilities at the time.|
|Multi-plant Firm*<br>|Dummy variable equal to one if the firm is part of a larger firm.|
|Log(Markup)<sup>†</sup><br>|Amount the sales price exceeds operating costs (i.e. the cost material inputs plus<br>wage costs butnot overheads and depreciation).<br>|

* These variables are only available for 2006 and 2008 surveys.<sup>~~†~~</sup> Markup information is only available for 2002 and 2005 surveys.

# **4 Descriptive Analysis of Trade Orientation and Firm Characteristics**

Before introducing the reduced form model, I provide a descriptive analysis of the relation between foreign exposure and certain measures of firm performance. First, I look at size distribution. Dividing firms into four groups according to their trade orientation, in Figure 1, I show the 12