This paper brings out the factors that determine micro level firm level productivity in the context of a developing economy that had undertaken policy reforms towards a freer market. It econometrically tests a few hypotheses on the basis of firm level panel data for a set of Indian industries. One of the strong results of the paper is that firm level outward orientation of exports and imports contributes significantly and positively to firm level productivity. This finding supports one of the propositions of the new growth theory that developing economies benefit significantly from free trade with developed economies through free flow of new ideas and technologies and externalities.
