A great deal of information is available on international trade flows and potential markets. Yet many exporters do not know how to identify, with adequate precision, those markets that hold the greatest potential. Even if they have access to relevant information, the sheer volume of information often makes the analytical process complex, time-consuming and costly. An additional challenge is that many exporters lack an appropriate decision-making methodology, which would enable them to adopt a systematic approach to choosing foreign markets.

Using firm-level data from two selected African countries, we examine whether firm-level investment in physical capital is a possible channel through which less productive firms gain entry into export markets. Our findings reveal that non-exporters who invest in physical capital increase their probability of switching status, from non-exporter to exporter, and we provide evidence that firm-level investment is correlated with increased productivity growth among exporters.