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Sector productivity and geographical diversification as export enhancing factors: the case of Portugal

An investigation of the relationship between productivity growth and exporting is vital to understand whether the policies of productivity-enhancing or of export-promotion are more adequate for economic progress. This thesis considers the relationship between exporting and productivity for thirty-two economic activities, in Portugal, from 2005 to 2017. I find that economic activities with high productivity levels are systematically likelier to register higher export levels than less productive ones. This result corroborates the self-selection theory. Furthermore, I test for the effect of geographical diversification on the volume of exports, and the presence of diminishing returns in this association. For both cases I find significant results, suggesting that economic activities enlisting more export destinations tend to possess higher export volumes, but also that after a certain threshold the negative effects of geographical diversification offset the associated positive benefits.