Trade and openness are Pareto optimal, which is the main argument for globalization. Empirically this has been a difficult question to answer. In the past 15 years or so empirical analysis focused on micro-level plant-level, data instead of aggregate time series. There have been two competing hypotheses: “self selection” and “learning-by-exporting”. In the former, causality runs from productivity to exporting; the opposite in the latter. Clearly there are serious policy implications. We test those hypotheses for four Arab countries (Morocco, Egypt, Oman and Qatar) using a variety of methods. There is evidence for both self-select and learning-by-exporting in Morocco. Exporting industries’ productivity levels dominate those of non-exporting industries in Morocco and Egypt. But there is no evidence in favor of exporting industries in the oilproducing countries, Oman and Qatar.

Trade and openness are Pareto optimal, which is the main argument for globalization. Empirically this has been a difficult question to answer. In the past 15 years or so empirical analysis focused on micro-level plant-level, data instead of aggregate time series. There have been two competing hypot...