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Does Exporting Lead to Better Performance? A Microeconometric Analysis of Matched Firms
Abstract
Exporting involves sunk costs, so some firms export while others do not. This proposition derives from a number of models of firm behaviour and has been exposed to microeconometric analysis. Evidence from the latter suggests that exporting firms are generally more productive than non-exporters; they self-select in that they are more productive before they enter export markets; but entry does not make them any more productive. This paper investigates exporting and firm performance for a large panel of UK manufacturing firms applying, for the first time, matching techniques. We find that exporters are more productive and they do self-select. In contrast to other evidence, however, we also find that exporting further increases firm productivity.
... More specifically, the experience of past exports is a very powerful indicator of the behavior of current exports. In fact, it has been found that companies that export in an earlier period are three times more likely to export in the future than those that previously did not export [3]. ...
... However, there are large fixed costs to enter the export market, which only the most profitable and productive companies can a˙ord [4]. Bernard and Jensen [9], Srinivasan and Archana [10] and Girma, Greenaway and Kneller [3] state that there is a direct and positive relationship between companies' productivity and exports. Also Fryges and Wagner [11], defend productivity as a determinant of exports and a positive relationship between exporting companies' and productivity. ...
... The larger levels of production, resources and capacity, could lead to increased exports. In this context, several studies, such as those of Wakelin [14] and Girma, Greenaway and Kneller [3], demonstrate that this factor positively a˙ects company's exports. However, this association between company's size and internationalization should not be considered an export barrier. ...
Despite the associated sunk costs, the turnover in exports is fundamental for the sustainability of an internationalized company. The footwear industry is no exception. In fact, Portuguese companies in the footwear sector export 95% of its production. This is one of the industries with a positive contribution the Portuguese trade balance. This study aims to analyze the factors that influence footwear exports in a Portuguese company in the North of Portugal. For this purpose, a database with information from the company is analyzed. A time series with monthly data was collected, for the period between January 2017 and June 2020. To explain the determinants of exports, a demand function with sales volume as the dependent variable is used. Results show that, for the company under study, productivity, number of workers and lagged sales have a positive impact on company's exports. While, company's equity presents a negative impact. Workers’ remuneration impact on exports is not statistically significant.
... Several studies have examined the relationship between exporting and enterprises performance (see e.g. Aw and Hwang, 1995;Bernard and Jensen, 1999;Girma et al., 2004;Hansson and Lundin, 2004;Greenaway and Yu, 2004). Regardless of the data examined and methodology used, these studies find that exporters are more productive compared with non-exporters. ...
... We pursue this issue further and perform an analysis of the determinants of export behaviour. Following Sterlacchini (2001), Castellani (2002), and Girma et al. (2004), we perform both a test on the determinants of the probability of exporting and of the intensity of exporting activity. We model the export behaviour of a firm specifying the following PROBIT equation for the probability of being an exporter: ...
... Our results echo those reported elsewhere (e.g. Bernard and Jensen, 1995 for the US; Bernard and Wagner, 1997 for Germany; Isgut, 2001 for Colombia), namely, that the performance characteristics of exporters and non-exporters are remarkably different, but contrast with those of Girma et al. (2004) who find no significant difference in performance between exporters and non-exporters. ...
This paper uses a novel manufacturing firm-level survey data in 19 sub-Saharan African (SSA) countries to explore the linkages among a number of export-market destinations (e.g., China, India, other Asia, EU, US, MENA, SSA excluding South Africa, and South Africa) and performance. The paper also examines differences between exporters and non-exporters performance and assesses self-selection. We find superior characteristics of exporters relative to non-exporters. Size, foreign ownership and past export experience enhance the propensity to export while continuing exporters outperform switching ones. Export destination matters: exporting to China leads to improvements in total factor productivity (TFP); India destination enhances the wage rate, labour productivity and TFP, while the South Africa destination depresses capital intensity. Furthermore, the study finds that export intensity matters for certain destinations, with higher levels of exports to the USA improving enterprise performance, such as increases in overall output and labor productivity, while the reverse holds for exports to other SSA countries. This latter finding clearly poses a challenge to efforts to increase intra-Africa trade. These findings should provide coherent and coordinated strategies for SSA policies seeking to promote economic development through exporting and diversification of trade partners.
... For instance, for firms from the United States, Bernard and Jensen (1999) and Hung, Salomon, and Sowerby (2004), for German firms Delgado, Farinas, and Ruano (2002) for Spain, and Wagner (2002), Arnold and Hussinger (2005) and Sharma and Mishra (2011, 2015 find little or no positive effects of export. Contrary to this, Baldwin and Gu (2003) for Canadain firms and Girma, Greenaway, and Kneller, (2004) and Greenaway and Kneller (2008) for the United Kingdom (UK) firms find favorable positive evidence of exporting. ...
... For instance, the works of Bernard and Jensen (1997), Hallward-Driemeier et al. (2002), Baldwin and Gu (2003), Aw et al. (2007Aw et al. ( , 2008, Damijan, Kostevc, and Rojec (2008), Ferguson (2010), Lileeva and Trefler (2010), Bustos (2011), Long et al. (2011), and Iacovone and Javorcik (2012 provide evidence for the correlation among exporting, technology adoption, and firm's R&D activities that could also affect productivity. Some others, for instance, Girma et al. (2004), Greenaway and Kneller (2007) for the UK; Kimura and Kiyota (2006) for Japan; Kraay (1999) for China, and Baldwin and Gu (2003) for Canada provide evidence about the significant impact of export on productivity. However, little or no positive effects of export are found in some studies, such as Bernard and Jensen (1999) and Hung et al. (2004) for firms from the United States, Delgado et al. (2002) and Wagner (2002), Arnold and Hussinger (2005) for German firms, Greenaway et al. (2005) for Swedish firms and Damijan and Kostevc (2006) and Bigsten and Gebreeyesus (2009) for Slovenian manufacturing enterprises. ...
... Our findings are relevant and have important policy implications. The findings regarding learning by export are especially important, as the presence of this effect has been confirmed by only few studies (Girma et al., 2004;and Kimura & Kiyota, 2006 for Japan; Greenaway & Kneller, 2007 for the UK; and Baldwin & Gu, 2003, for Canada). Therefore, our results provide support to the idea that firms having export experience are likely to take advantage of their international contacts, accumulated knowledge, and advanced technology at a faster rate. ...
This study tests the impact of export and foreign technology on the indicators of firm's performance for a sample of Indian manufacturing firms. To provide new insights into the debate over the linkage among export, technology, and performance, we employ several important performance indicators of firms, such as labor productivity, total factor productivity, product and process innovation, wage, size, and capacity utilization. For this study, we utilize a sample of firms from a recent Enterprise Surveys data of the World Bank on Indian manufacturing. The results of the analysis indicate that exporters are more productive and innovative. They are also large and utilize the capacity in a better way. The results further indicate that export leads to substantial performance gain for Indian firms. Similar results are also estimated for the effects of the use of foreign technology in the production process. Our findings also suggest that exporting products to the developed world have a significant effect on performance and further indicate that single product firms are more benefited from export and technology transfer than multi-product firms. It is also found that firms with more productivity decide to export their products; however, technology transfer is not a significant factor in making decisions about export or enhancing export-intensity. Overall, our analysis supports the argument that research and development (R&D) in the developed countries is an important source of technology for developing countries, and this takes place through export as well as direct technology transfer.
... Selection bias gets addressed via matching considering that exporters and nonexporters would otherwise have similar characteristics. Thus, we correspondingly need to identify those variablessize, firm age, productivity, and so forththat actually affect the probability of exporting and make firms display greater export propensities (see, e.g., Bigsten et al., 2004;Girma et al., 2004;Bigsten and Gebreeyesus, 2008;Becker and Egger, 2013). ...
... In the present article, we may consider that this selection bias problem does not arise because the Portuguese exporters firms were not selected according to certain criteria. Thus, we do not need to match the exporting firm with a nonexporting firm j in accordance with the nearest-neighbour matching method (Girma et al., 2004). The problem of selection biases nevertheless encounters multiple methods for their resolution. ...
... Propensity score matching represents one correction strategy (see Wooldridge, 2003 about truncated and censored regression models). Following Wagner (2002) and Girma et al. (2004), Bigsten and Gebreeyesus (2008) apply Bond (1998, 2000) system-GMM to control for endogeneity and applied matching to control for selection bias. The matching as well as system-GMM is also performed in Stata (see Sianesi, 2001). ...
This article examines the determinants of Portuguese exports, applying data from 277 manufacturing firms for the period 2006–2010. In 2010, these firms accounted for about 47% of total Portugal’s exports. Both the static and dynamic results of the estimated models confirm the positive influence of productivity on variations in exports. The dynamic estimations also suggest that exports in the previous period hold a positive effect on contemporaneous exports, confirming the Roberts and Tybout (1997) sunk cost hypothesis for exports. In the dynamic analysis, the labour costs and the size of the firm do not have a statistically significant effect on Portuguese exports with the findings also pointing to increased expenditure on research and development (R&D) generating no statistically significant effect on exports. The lagged R&D expenditure was also insignificant in explaining the change of Portuguese exports. Thus, these results suggest that applying a product or process innovation measure returns better results than indirect measures such as R&D expenditure.
... Relativamente à rubrica remunerações, Arbache e Negri (2001) Em alguns dos estudos consultados verificou-se a utilização da variável produtividade (quociente VAB sobre L), no sentido das empresas exportadoras terem níveis de produtividade do trabalho superiores (Cassiman, 2007;Girma et al. 2002). No presente estudo, esta variável revelou-se estatisticamente não significativa, motivo que nos levou a optar por uma especificação diferente, considerando VAB e L separadamente. ...
... s custos de distribuição. De acordo com o modelo desenvolvido pelo autor, as empresas exportadoras enfrentam um custo (relativamente) elevado de entrada inicial no mercado externo. Estes custos fixos funcionam como uma barreira à entrada para as novas empresas. Só as empresas com elevados níveis de produtividade conseguem entrar no mercado externo.Girma, Greenaway, and Kneller (2002), tendo por base os dados de empresas do ReinoUnido (de 1988Unido (de a 1999 verificaram que, em média, as empresas exportadoras têm maior dimensão e são mais produtivas. Constataram, também, que as empresas só entram no mercado externo se o valor actualizado dos seus lucros for superior aos custos fixos que as empresas incorrem ao parti ...
... Girma, Greenaway, and Kneller (2002) concluem que as empresas exportadoras pagam, em média, salários superiores (mais 4,1%). Isso seria justificado pelo facto das empresas exportadoras terem uma percentagem maior de trabalhadores qualificados.Este capítulo tem como principal objectivo a especificação do modelo econométrico. ...
... Most of the previous studies have mainly focused on only one part of trade and productivity nexus and have concluded that exporters are superior and more productive than non-exporters (e.g. Bernard & Jensen, 1999, for the US; Girma, Greenaway, & Kneller, 2004, for the UK; Wagner, 2008, for Germany;Castellani, 2002, for Italy). However, barring few exceptions, the role of import has so far been ignored, especially in context of developing economies. ...
... In the empirical literature, some recent studies by Girma et al. (2004), Greenaway and Kneller (2007) for UK; Kimura and Kiyota (2006) for Japan; Kraay (1999) for China, Baldwin and Gu (2003) for Canada have found that past export performance has a significant impact on productivity. 7 While Alvarez and López (2005) for Chile, Isgut (2001) for Columbia, Arnold and Hussinger (2005) for Germany failed to validate the learning from exporting. ...
... At empirical level, overwhelmingly it is found that firms which engage themselves in exporting are usually more productive than firms that never export. Studies of Bernard and Jensen (1995, 1999 for United States; Bernard and Wagner (1997) and Wagner (2002) for Germany; Aw, Chung, and Roberts (2000) for Korea and Taiwan; Clerides, Lach, and Tybout (1998) for Colombia, Mexico and Morocco and Girma et al. (2004) for the United Kingdom, have shown that self-selection in export market is evidently true. In the case of self selection in import market Andersson et al. (2008), Vogel and Wagner (2010), Serti and Tomasi (2009) have clearly found a positive impact of productivity on importing (see Table 2A of Appendix A for a summary of findings). ...
This paper explores the linkage between trade participation and productivity performance for a sample of Indian manufacturing firms over the period 1994–2006. We consider two yardsticks of productivity, namely Total Factor Productivity (TFP) and Labor Productivity for analysis purpose. As far as the labour productivity is concerned, the results indicate that exporters, importers and both way traders are more productive than others. Although, overall our results are somewhat mixed and indicate for a weak inter-link between trade and productivity, but the result appear to be more favourable for the export channel of trade as it clearly indicates that exporting leads to productivity improvement over time. There are also some statistical evidences to conclude that more productive firms self-select themselves in the exporting as well as importing market. The learning effects of importing on productivity growth turn out to be more favorable for labour productivity than TFP. Finally, the results clearly highlight the positive effect of R&D efforts of firms on labour productivity in the Indian manufacturing.
... As Olley and Pakes (1996) have shown, OLS produces biased estimates of the coe¢ cient on the variable input (labor, in this case); thus, the Bernard and Jensen …nding of no superior performance by exporters may, in part, be driven by their estimation technique. Girma et al. (2002) compare exporting and non-exporting U.K. …rms by applying matching techniques using TFP, as estimated from OLS regressions with time-speci…c e¤ects. They …nd evidence that exporting …rms are more productive and that self-selection into exporting occurs. ...
... When applying a matching technique, I face a trade-o¤ of satisfying the balancing property or capturing the maximum of …rms'characteristics that are related to the …rms' probability of becoming exporters. Following Girma et al. (2002), I am estimating the following probit model, where the dependent variable is the export dummy, controlling for year and industry e¤ects: ...
... As discussed in Section 3, several studies (Arnold and Hussinger 2005; Girma et al. 2002, De Loecker 2005 have applied matching based on propensity score to uncover the underlying relationship between exporting and …rm performance, but they delivered mixed evidence on whether exporting leads to better performance. ...
Recent theoretical models of …rm production behavior (Melitz 2003, Melitz and Ottaviano 2005) imply higher productivity among exporters as compared to non-exporting …rms. Sunk costs of exporting lead to self-selection of …rms into foreign markets, hence only the most productive …rms will export. In this paper I examine the empirical evidence of the …rm production behavior mod-els' implications using an unbalanced panel of Ukrainian manufacturing …rms and applying the semi-parametric estimation technique developed by Olley and Pakes (1996) to estimate TFP. Similarly to other empirical studies, I …nd that exporting …rms are, on average, more productive. As a robustness check I use Levinsohn and Petrin (2003) method to estimate TFP. Both methods produce very similar distributions of TFP across exporting and non-exporting …rms. In line with previous research I try to distinguish between self-selection and learning-by-doing. For this purpose I apply matching, which is widely used in micro-level studies. Matching appears to demonstrate that even after control-ling for self-selection, exporters seem to be more productive. However, results should be interpreted with caution since productivity di¤erential attributed to exporting may be caused by unobservable characteristics, thus leaving room for further investigation.
... Relativamente à rubrica remunerações, Arbache e Negri (2001) Em alguns dos estudos consultados verificou-se a utilização da variável produtividade (quociente VAB sobre L), no sentido das empresas exportadoras terem níveis de produtividade do trabalho superiores (Cassiman, 2007;Girma et al. 2002). No presente estudo, esta variável revelou-se estatisticamente não significativa, motivo que nos levou a optar por uma especificação diferente, considerando VAB e L separadamente. ...
... s custos de distribuição. De acordo com o modelo desenvolvido pelo autor, as empresas exportadoras enfrentam um custo (relativamente) elevado de entrada inicial no mercado externo. Estes custos fixos funcionam como uma barreira à entrada para as novas empresas. Só as empresas com elevados níveis de produtividade conseguem entrar no mercado externo.Girma, Greenaway, and Kneller (2002), tendo por base os dados de empresas do ReinoUnido (de 1988Unido (de a 1999 verificaram que, em média, as empresas exportadoras têm maior dimensão e são mais produtivas. Constataram, também, que as empresas só entram no mercado externo se o valor actualizado dos seus lucros for superior aos custos fixos que as empresas incorrem ao parti ...
... Girma, Greenaway, and Kneller (2002) concluem que as empresas exportadoras pagam, em média, salários superiores (mais 4,1%). Isso seria justificado pelo facto das empresas exportadoras terem uma percentagem maior de trabalhadores qualificados.Este capítulo tem como principal objectivo a especificação do modelo econométrico. ...
This study examines the evolution of Portuguese exports to Spain and its determinants in the period 2004-2008, based on a sample of the 97 largest exporters to Spain. The study uses various economic and financial indicators to characterize these companies and comparison is made between the sample's five largest companies and five of the small and medium enterprises (SMEs). The analysis highlights the geographic concentration of companies in the districts of Porto and Aveiro and the better performance of large enterprises in terms of productivity, return on equity and average salary compared to SMEs. The econometric study, using panel data, considers as theoretically relevant explanatory variables the gross added value, net income, equity, the size of the company, the remuneration and expenditure onresearch and development (R&D). The results of the estimated model confirm the positive influence of these variables on the variation of exports, although the expenditure on R&D proved to be statistically insignificant.
... By going international, SMEs not only increase their customer base allowing for greater economies of scale, and thus increasing their growth potential (Girma et al., 2002), but the ...
... The authors concluded that exports are not significantly correlated with employment. In their analysis of 8,992 UK manufacturing firms during 1988-1999, Girma et al. (2002) found that exporting is positively and significantly correlated with business performance and employment levels. ...
Purpose
This study evaluates how different strategic choices related to the transitions in-and-out of exporting (export entry, export persistence, export exit) impact employment growth in Romanian small and medium-sized businesses.
Design/methodology/approach
Using linear regression models on a sample of 566 Romanian SMEs, we model employment growth as a function of three different dimensions of foreign market participation: export entry, persistence, and exit.
Findings
Results indicate that exporting is positively associated with employment growth. The findings reveal that the different strategic choices linked to exporting have a differentiating impact on employment growth: while employment growth is more pronounced among new exporters which points to the presence of an impulse effect of exporting, businesses that interrupt their exporting activities report employment losses.
Research limitations/implications
This study underlines the relevance of distinguishing the specific impact of the different export behaviours related to the transitions in-and-out of exporting.
Practical implications
The results of the study fuel the debate on the relevance of promoting policies that encourage exporting among small businesses operating in emerging economies.
Originality/value
This study presents an original analysis of the distinctive effect that different forms of export behaviour related to the transitions in-and-out of exporting have on employment growth. The relevance of this study not only flows from the particular empirical design that simultaneously evaluates different export choices and their specific impact on employment growth.
... Further exploitation of the export status gives fruitful insights. For example, Girma et al. (2002) find that firms with higher productivity levels are more likely to export, where export is defined as either exporting or switching to export. However, the authors find no effect of productivity on the switch to non-export. ...
The effect of total factor productivity (TFP) on exports particularly interests policy-makers and economists, but empirical evidence is ambiguous. This paper uses the 6-wave panel data in 2010-2015 to investigate the impact of TFP on export transitions at the firm level. We distinguish different types of export transitions, namely start, stop, continuity, fluctuation, and striving, and different phases of export transition. The Generalised Method of Moments (GMM) estimation is applied to control for endogeneity and unob-served time-invariant specific components. The results reveal that (i) the effect of productivity on export (the self-selection hypothesis) is heterogeneous, depending on specific sectors and types and phases of export transitions; (ii) productivity growth does not necessarily result in positive effects on and lead to participation in types and phases of export transitions. Our results also reveal strong evidence of favourable sunk cost in long-run export striving in nearly all sectors, and unlike previous studies, empirical results show a negative effect of sunk cost in some manufacturing sectors. Policy-makers should create dynamic comparative advantages and favourable environments for new exporters, focus the relevant policies on productivity stimulus, and strengthen the likelihood of survival for the domestic firms in the competitive global markets. ARTICLE HISTORY
... Although innovative and non-innovative firms face similar fixed costs to enter global markets, innovative firms earn a higher expected profit from exports, making them more likely to enter the international market. For example, Girma et al. (2004) concluded that exporter firms in Great Britain are more productive and larger in scale. It is observed that there is no distinction between innovation input (R&D expenditure or the number of R&D personnel) and innovation output (product or process innovation) in early studies focusing on the impact of innovation on exports. ...
... Trên thế giới, rất nhiều học giả nghiên cứu về tác động của xuất khẩu tới hiệu quả hoạt động của DN. Dưới góc độ lý thuyết, Krugman cho rằng thương mại quốc tế nói chung, xuất khẩu nói riêng, giúp DN tận dụng được lợi thế của kinh tế quy mô, do đó tăng tiềm năng tăng trưởng của họ 25,26 . Nhờ có xuất khẩu, các DN thay vì sản xuất quy mô nhỏ để phục vụ thị trường trong nước thì có thể mở rộng quy mô sản xuất để phục vụ thị trường thế giới. ...
The paper aims to examine the impact of exports on the growth of Vietnamese manufacturing small and medium-sized enterprises (SMEs) by exploring the information of 36,486 enterprises across 24 manufacturing sectors from the Vietnam Annual Enterprise Survey (VAES) in the period 2014-2019. To deal with the problem of variable variance, autocorrelation, and endogeneity of the model, the paper uses the Pooled Ordinary Least Squares (POLS) regression method with a strong standard error method and system Generalized Method of Moments (GMM). Export participation by SMEs is positively associated with business growth in terms of sales and employee, according to the findings. Moreover, the positive impact of exporting on firm growth is greater among permanent exporters than among new exporters. The relationship between exporting and employment growth is negative among firms that exit international activities. The study's findings indicate the need of adopting policies that promote SMEs in transition economies like Vietnam to engage in exporting activities. Furthermore, the findings show that financial assistance and suitable ownership would enable SMEs to take advantage of export opportunities to increase sales and employees.
... For one, an extensive empirical literature has investigated productivity patterns across exporting and non-exporting firms. Evidence is now available for a number of countries, including the United States Jensen 1999, 2004), the UK (Girma et al. 2004), Germany (Arnold and Hussinger 2005, also Fryges 2004 for a comparison of young high-tech firms in the UK and Germany), Taiwan and Korea (Aw et al. 2000) and for developing countries such as Chile (Pavcnik 2002), Colombia, Mexico and Morrocco (Clerides, Lach and Tybout 1998). The general message coming from this evidence is that exporters tend to outperform non-exporting firms, and that the causality mostly runs from productivity to export status. ...
This paper tests some of the predictions of recent advances in trade theory that have focused on different trade patterns of firms within the same sector. Helpman, Melitz and Yeaple (2005) develop a model in which innate productivity differences between firms determine the degree of international engagement of firms: The least productive firms produce for the domestic market, better performers engage in export activities, and the top firms establish foreign subsidiaries. Using German firm-level data from 1996 to 2002, we test this prediction using non-parametric methods, by examining the distribution functions of the three subsets of firms for stochastic dominance. Rather than just comparing first moments, this technique allows us to compare productivity over the entire distribution. Our results show robust support for the prediction from theory. --
... , for example,Powell, Wagner (2014);Wagner (2007);Delgado, Farinas, Ruano (2002);Girma, Greenaway, Kneller (2002);Aw, Chen, Roberts (2001).6 Mińska-Struzik (2014) provides a very detailed overview of empirical studies on learning-by -exporting.7 Andersson, Lööf (2009). ...
The aim of this paper is to investigate the relation between exports and economic performance and the extent of state ownership in the largest non-financial
enterprises in Poland, included in the ranking Rzeczpospolita Top 2000 Polish Enterprises (henceforth Rzeczpospolita List 2000). Our research is based on firm-level data on export, turnover, employment, productivity, and three financial indicators.
We address the following research questions:
1. What is the share of export companies in the group of the largest non-financial enterprises in Poland, according to ownership structure (state-owned and privately-owned companies) and sectors?
2. Are there differences in the economic performance of exporting companies compared to their non-exporting counterparts?
The paper is structured as follows. Section 2 reviews the literature on the relation between exports and economic performance. Section 3 introduces a statistical description of the largest Polish state-owned exporters in the period 2011–2015. Section 4 presents the results of the empirical analysis and comparisons of exporters and non-exporters in terms of ownership structure and business sectors. Section 5 concludes this research.
... By the same argument, firms will stop exporting if they become less productive, resulting in a negative return from trade. However, sunk costs might stop them from doing so immediately, leading to lagged exits following negative productivity changes (Girma et al. 2004). Argument (ii) that firms' performance will improve if they start exporting has been linked to potential learning effects and higher competition in export markets. ...
Forthcoming in Empirica.
The analysis deals with the influence of exporting on the demand for workers with different skill levels. Previous literature suggests that this includes two major topics. First, productivity of exporting firms may increase due to learning facts after entering international markets and/or be higher initially due to self-selection of firms into exporting. Second, exporting potentially leads to a change in the employment structure towards highly skilled workers. We applied a conditional difference-indifference regression model of labor demand for three different skill levels to investigate this hypothesis. For this purpose, we use German establishment panel data that covers the period from 2000 to 2014. The outcome shows that not only self-selection into exports must be controlled for but also that changes in employment seem to be skill biased in manufacturing firms starting export activities. Nevertheless, there are no corresponding findings for firms that stop exporting or establishments in the service sector respectively.
... The author has shown that export concentration influences positively export performance by destination country. At the firms' level, many empirical works have underlined the positive effect of exporting on firms' performance (e.g., Aw and Hwang 1995;Bigsten et al. 2004;Girma et al. 2004;Hansson and Lundin 2004;Greenaway and Yu 2004;Rankin et al. 2006;Van Biesebroeck 2005). As far as the relationship between export diversification and exporting firms' performance is concerned, Solano et al. (2019) have shown, inter alia, for 279 exporting firms over a six-years period (2010)(2011)(2012)(2013)(2014)(2015) in the Chilean fresh fruit export sector, that related product diversification exerts a positive effect on firms' export performance. ...
The current analysis proposes a definition and a measure of the ‘quality of tax performance’, and examines how export product diversification influences tax performance quality in developing countries. Using a sample of 115 developing countries over the period 1981–2014, the empirical exercise shows that export product diversification induces higher quality of tax performance. Furthermore, less developed countries (for example, low-income countries) enjoy a higher positive effect of export product diversification on the quality of tax performance than relatively advanced developing countries. These findings have important policy implications. In particular, they show that while policies for promoting export product diversification are not pure fiscal and tax administration-related measures, they do influence positively the quality of tax performance in developing countries.
... This proposition derives from a number of models of firm behavior and has en exposed to microeconometric analysis. Evidenc from the latter suggest that exporting firms are generally more productive than non exporters; they self select in that they are more productive before they enter export markets [14]. ...
... Several studies support the contention of a positive relationship between export intensity and efficiency of firms (Aw & Hwang, 1995;Bernard & Jensen, 1995;Girma, Greenaway, & Kneller, 2002). Some studies have also highlighted exportinduced efficiency gains through the process of learning-by-exporting (Clerides & Tybout, 1998;Rosenberg, 1982). ...
The study determines the efficiency of Indian pharmaceutical firms and its determinants in the pre- and post-product patent regime. Overall inefficiency in the industry is higher due to the inefficient conversion of inputs into output rather than through scale inefficiency. The study finds that the Product Patent Act has a negative impact on efficiency. Ownership, capital imports intensity and size variables are positively related with efficiency scores whereas age, time dummy and size square variables are inversely related. The study supports the finding that with an increase in mergers and acquisitions, a movement towards diversifying operations, the use of advanced imported foreign technology, investment in fixed assets and judicious allocation of resources for marketing activities could improve firm performance. For future policy implications, the small firms may either merge into bigger entities or manufacture pharmaceutical products for other companies, so as to raise operational scale and improve capacity utilisation.
JEL Classification: C02, C61, D2, L65
... Since productivity is an important determinant of export market survival as discovered by (Girma et al., 2004;Ilmakunnas and Nurmi, 2010;Askenazy et al., 2011), this study checks the robustness of our results by employing productivity estimated by solow residual in Columns 5–6 ofTable 10and measured by labor productivity in Columns 7–8 ofTable 10which is defined as added-value against the number of employees separately. I observe that the results are still in line with our previous findings in Section 4. ...
This paper highlights the relationship between foreign exchange rate fluctuations and firms’ export market dynamics using a Chinese firm-level production data and a firm-level trade data over the period of 2000–2006. This study adopts a discrete-time survival model in our empirical investigation and further executes several extensions and robustness checks to the baseline results. The main results of the paper can be summarized as follows: First, an exchange rate appreciation increases the likelihood of export market exit and decreases the probability of export market entry. Second, high productivity firms are less likely to exit from export markets and more likely to enter export markets in the period of exchange rate appreciation. Third, exchange rate appreciation decreases the likelihood of export market entering and increases the likelihood of export market exiting more for private-owned firms, young firms and non-eastern firms. Finally, other sources of heterogeneity, such as extensive margins, import demand elasticity, different destinations, U.S. dollar peg, and the liberalization of trading rights is also important to the effects of exchange rate changes.
... De hecho, muchas empresas producen bienes de mayor calidad para los mercados internacionales en comparación al mercado interno. A su vez, los exportadores experimentan un aumento del gasto en innovación y desarrollo (I&D) para reducir costos y aumentar la calidad, para lo cual es necesario primero haber alcanzado cierto grado de desarrollo (Girma et al., 2004). ...
The substantial increase of Latin America´s exports to China has cast doubts on the impact they may have on Latin American countries´ growth in the long term. Although countries in Latin America benefit from expanding exports and taking advantage of scale economies, exports to China may also deepen countries´ trade specialization towards commodities, leading to the problems related to the “natural resources curse” and “Dutch Disease.” However, there is no empirical evidence so far showing whether exporting to China is positive or negative for development in Latin America.
As a result, the aim of this dissertation is to examine whether there is a causal relationship between exports to China and growth in Latin America, both in the short and long-run, as well as its sign and significance. To this end, I use a sample of 15 Latin American countries between 1991 and 2013, and non-stationary methods in heterogeneous panels. Since trade linkages between countries in South America and China are unique due to the complementarities of their resource endowments and relative advantages, I also use a subsample of 8 South American countries between 1983 and 2013 in order to study if the impact of exporting to China on these countries´ growth is different. Moreover, I analyze if there are nonlinearities in the relationship between exports to China and growth in Latin America.
In spite of not being completely robust, the results of this dissertation suggest that exports to China and both, export and non-export output in Latin America, do have a stable relation in the long term, without strong evidence in favor of a structural break. Furthermore, there is a bidirectional causal relationship between exports to China and growth, both in the short and long-run, and exports to China do causally lead to changes in exports to the rest of the world. While in the short term larger exports to China cause lower output in Latin America, in the long term there is no a significant effect on growth after controlling for cross-sectional dependence. Nevertheless, the results suggest that exports to China may lead to deepen trade specialization towards primary goods. Moreover, the trade pattern of the flows to China is not related to the effect on growth, except export´s concentration which is positively related to Latin America´s output elasticity with respect to exports to China. Finally, there is some evidence suggesting that exports to China and their pattern are becoming more relevant for Latin American countries´ growth since 2000.
In brief, exports to China do not have a negative impact on Latin American countries´ growth but there is no evidence in favor of “exports to China-led-growth” either. Even though exporting to China may deepen the “commodification” process in Latin America, they also provide benefits, such as those from scale economies, which may compensate the negative effects.
... Working with panel data covering 1996, 1998, 2000, and 2002, we can investigate the dynamics of private r&D expenditures in subsidized firms relative to the matched counterfactuals. Following Girma et al. (2004), we employ the following difference-in-differences regression: ...
We study the dynamic effects of research and development (R&D) subsidies on private R&D spending in Slovenia and examine the changes in corporate R&D spending behavior due to R&D subsidies by applying propensity score matching methodology. Taking the difference-indifferences approach, we evaluate how much the supported firm would have spent on R&D if it had not received the subsidy. The results confirm the complementary effect of public subsidies on private R&D spending and prove that R&D subsidies are an influential variable for the increase in private R&D spending. The results also point to three sources of subsidized firms' heterogeneity that have significant effects on the scope of R&D subsidies: (1) the larger the previous private R&D spending of firms, the smaller the increase in current R&D spending of subsidized firms; (2) the larger the sales, the higher the increase in private R&D spending of subsidized firms; and (3) the effect of R&D subsidies decreases with persistency of subsidizing. Firms that had received subsidies more than twice previously increased their R&D expenditures more slowly than nonsubsidized and less frequently subsidized firms.
... To overcome the problem of self-selection we use the method of matching, which aims at re-establishing the conditions of a natural experiment with non-experimental data (Heckman et al. 1997, Blundell et al. 2002. This methodology has also been used to evaluate the effects of exporting and of acquisitions on firms' performances and returns to scale by Girma, Greenaway and Kneller (2002), Girma, Kneller and Pisu (2002b), Wagner (2002) and Girma and Gorg (2002). Egger and Pfaffermayr (2003) use matching estimators to analyse the effects of outward investments on the decision to invest at home in tangible assets and in R&D. ...
Top economists examine one of the key forces in globalization from a wide range of theoretical and empirical perspectives.
The multinational firm and its main vehicle, foreign direct investment, are key forces in economic globalization. Their importance to the world economy can be seen in the fact that since 1990 foreign direct investment has grown more rapidly than the world GDP and world trade. Despite this, the causes and consequences of multinational firm activity are little understood and until recently relatively unexamined in the theoretical literature. This CESifo volume fills this gap, examining the multinational enterprise (MNE) and foreign direct investment (FDI) from both theoretical and empirical perspectives. In the theoretical chapters, leading scholars take a wide range of modern analytical approaches—from new growth and trade theories to new economic geography, industrial organization, and game theory. Taking current theoretical work on MNE and FDI as a starting point and aiming to extend the existing theoretical framework, the contributors consider such topics as investment liberalization and firm location, tax competition, and welfare consequences of FDI and outsourcing. The empirical chapters test several of the key hypotheses of recent theoretical work on MNE and FDI, examining topics that include productivity effects on Italian MNEs, the different effects of outsourcing in Austria and Poland, location decisions of MNEs in the European Union, and other topics.
ContributorsOscar Amerighi, Bruce A. Blonigen, Steven Brakman, Davide Castellani, Ronald B. Davies, Alan V. Deardorff, Fabrice Defever, Harry Garretsen, Anders N. Hoffman, Andzelika Lorentowicz, James R. Markusen, Charles van Marrewijk, Dalia Marin, James R. Marukusen, Alireza Naghavi, Helen T. Naughton, Giorgio Barba Navaretti, J. Peter Neary, Gianmarco Ottaviano, Alexander Raubold, Glen R. Waddell
... Les exportations peuvent engendrer des externalités technologiques positives qui stimulent la productivité industrielle. Les études suggèrent qu'en général le niveau de productivité des firmes exportatrices est plus élevé que celui des firmes non exportatrices (Girma, Greenaway et Kneller, 2002). Clerides et al. (1998) ont constaté aussi que les firmes marocaines exportatrices sont plus productives que les firmes non exportatrices. ...
Résumé : Nous avons estimé l'interaction entre l'ouverture économique, la présence étrangère et la productivité de travail dans le cas des industries manufacturières marocaines. Les estimations économétriques en données de panel montrent que le travail qualifié, la capacité d'exportation et la présence étrangère exercent un impact positif et significatif sur la productivité apparente du travail des firmes marocaines. Cependant, le rapport entre la présence étrangère et la productivité dépend de la capacité d'absorption des firmes marocaines et de l'écart technologique entre les firmes étrangères et les firmes marocaines. La présence étrangère n'implique pas systématiquement le transfert et la diffusion des technologies. Un écart technologique trop important ou trop petit entre les firmes étrangères et les firmes domestiques peut ne pas faciliter ce transfert. Mots clés : Présence étrangère, Productivité de travail, Ecart technologique, Industries manufacturières marocaines.
... A growing body of empirical studies have found consistent evidence that exporters are larger and more productive than their domestic counterparts( Aw&Chang 1998, Bernard and Jensen 1997, Chen&Tang 1987, Clerides ,Lach and Tybout 1998, Girma , Greenaway and Kneller 2001, Delgado,Farinas and Rano 2002. The analytical literature to explain the significant productivity gap between exporting firms and their domestic counterparts are pioneered by Bernard and Jensen (1999) in which they outlined two alternative but not mutually exclusive hypothesis on the causal link between productivity and exporting. ...
This paper investigates the interaction between exporting and productivity at firm level , using a panel of firms in UK chemical industry which is highly technology intensive and the largest UK manufacturing exporter. We find exporters are on average smaller but more productive than non-exporters. Applying empirical techniques from Bernard and Jensen(2001) and Kraay(1999), we find the superior productivity performance among exporters is caused by both self-selection and learning-by-exporting effect. In contrast to other studies, we find learning effect is significantly positive among new entrants, weaker for earlier entrants and negative for established exporters.
... The authors report that the growth rates of production and non-production employment were higher for exporting firms relative to non-exporting firms. Girma, Greenaway and Kneller (2002) report similar findings for employment growth rates using firm level data from the U.K. Kletzer (1998aKletzer ( , 2002 reports that increases in exports and domestic demand are associated with lower displacement rates. To control for domestic market and export sector factors I construct the following variables. ...
While economists have long considered increased international trade as a net welfare-improving endeavor, public opposition to further trade liberalization has grown in recent years. Critics cite domestic job loss due to firm relocation or plant closure as an expected consequence of liberalization. In this study I investigate the hypothesized relationship between rising import competition and domestic job displacement using individual worker data from the Displaced Worker Survey and industry-level trade quantity and import price data. The analysis is undertaken for the full U.S. manufacturing workforce and, to allow for potential heterogeneity of effects across worker groups, for various worker sub-classifications. A new industry concordance extends the data through 1999. The empirical findings are consistent with the labor market dynamics predicted by standard trade theory. A positive relationship is observed between rising import competition and industry displacement rates, as is considerable heterogeneity with respect to this relationship across worker sub-classifications. However, domestic demand shifts and macroeconomic fluctuations are found to impact displacement to a greater extent than does increased import competition.
... Working with panel data covering 1996, 1998, 2000, and 2002, we can investigate the dynamics of private r&D expenditures in subsidized firms relative to the matched counterfactuals. Following Girma et al. (2004), we employ the following difference-in-differences regression: ...
We study the dynamic effects of research and development (R&D) subsidies on private R&D spending in Slovenia and examine the changes in corporate R&D spending behavior due to R&D subsidies by applying propensity score matching methodology. Taking the difference-in-differences approach, we evaluate how much the supported firm would have spent on R&D if it had not received the subsidy. The results confirm the complementary effect of public subsidies on private R&D spending and prove that R&D subsidies are an influential variable for the increase in private R&D spending. The results also point to three sources of subsidized firms' heterogeneity that have significant effects on the scope of R&D subsidies: (1) the larger the previous private R&D spending of firms, the smaller the increase in current R&D spending of subsidized firms; (2) the larger the sales, the higher the increase in private R&D spending of subsidized firms; and (3) the effect of R&D subsidies decreases with persistency of subsidizing. Firms that had received subsidies more than twice previously increased their R&D expenditures more slowly than nonsubsidized and less frequently subsidized firms.
... Sjoholm (1999) for Indonesia manufacturing industries, Iscan (1998) for Mexican manufacturing industries and Nishimizu and Robinson (1994) for Japan, Turkey, Yugoslavia and South Korea concluded that the larger the share of output that goes into exports ,the higher the productivity growth. Some important studies in this category include: Aw et al. (2000) for the case of Korea and Taiwan; Mexico and Morocco; Girma et al. (2004) for United Kingdom. Focusing on the different phases of transition from exporter to non-exporter Bernard and Jensen (2004) argue that while exporters have noticeably higher productivity levels, but there is no evidence that export participation increases plant productivity growth rate. ...
The objective of this paper is to investigate the export-productivity nexus in some selected manufacturing industries in India for the period 1979-80-2008-09. First, it estimates TFP growth by translog index and thereafter capacity adjusted TFP growth has been estimated to eliminate short run cyclical movements .Second, it examines export-productivity nexus by Error Correction Model. The empirical results provide support for a link between export growth and productivity growth. It is evident from the result that short run casuality from export to TFP is prevalent for cement industry and paper industry and reverse short run casuality from TFP to export for aluminium and iron &steel industry and for glass industry, short run casuality is undirectional.The results also indicate that long run causality is bi-directional in the case of cement, iron & steel and paper industries. The result seems to suggest that export generates both significantly short-run and long-run impacts on TFP growth in energy intensive industries in India.
... 26 See e.g. Girma et al. (2002) and Girma and Görg (2003). The method is frequently used in the evaluation literature on active labor market programs. ...
The paper examines whether multinational enterprises (MNEs) − Swedish MNEs and foreign-owned firms − pay higher wages than non-MNEs in manufacturing even if I control for firm and individual characteristics. In accordance with the idea that MNEs are superior to other firms I find that MNEs pay higher wages than non-MNEs, in particular for skilled labor. Yet the MNE wage premium is low; average wages in MNEs are between 4-7 percent higher than in non-MNEs, while estimates of wage equations on individual level give a MNE wage premium around 1-2 percent. Higher wages in foreign-owned firms may result from foreign acquisitions of high-wage firms, e.g. Swedish MNEs. Alternatively, the acquired firms might have more favorable wage growth than non-targeted domestically owned firms. Nevertheless, the two explanations of higher wages in foreign-owned firms are not mutually exclusive my results only support that foreign firms select high-wage firms (Swedish MNEs as well as non-MNEs) for acquisition.
... Assuming that xed costs are higher for exporting than for domestic sales only and that they are even higher for foreign plant set-up and running a multinational network than for exporting, the most productive rms engage in FDI, less productive companies export, and the least productive rms stay in the domestic market only (see Helpman, Melitz, and Yeaple, 2004). This theoretically predicted pattern has been supported by a number of empirical studies (for the dierence between exporters and non-exporters, see Arnold and Hussinger, 2005a;Bernard and Jensen, 1999;Clerides, Lach, and Tybout, 1998;Girma, Greenaway, and Kneller, 2002; for the dierence between exporters and MNEs, see Girma, Kneller, and Pisu, 2005;Arnold and Hussinger, 2005b). Recently, Conconi, Sapir, and Zanardi (2010) Devereux and Grith, 1998;Becker, Egger, and Merlo, 2009;Chen and Moore, 2010). ...
... Only companies with high levels of productivity can enter the foreign market. Girma et al. (2002), based on data from companies in the UK, found that exporting firms are, on average, larger and more productive than the other firms. ...
This study examines the evolution of Portuguese exports to Spain and its determinants in the period 2004-2008, based on a sample of the 97 largest exporters to Spain. The econometric study, using panel data and a static and dynamic analysis, considers as theoretically relevant explanatory variables productivity, equity capital, remuneration and innovation measured by the expenditure on research and development (R&D). The static results of the estimated models confirm the positive influence of productivity and equity capital on the variation of exports, and the negative effect of the labour costs. The variable R&D is statistically significant, with a positive effect on Portuguese exports in the dynamic model. The dynamic estimations also suggest that the exports in the previous period have a positive effect on contemporaneous exports.
This article is concerned with how financial constraints affect both the choice to enter a market and the amount of export revenue. Utilizing a sample of 2,697 manufacturing companies in Vietnam from the years 2012 to 2020, the study applys ordered probit regression model estimate a financial constraint index to quantify the degree of firm financing constraints. The empirical results from the fixed-effect estimation indicate that a financially constrained firm would export more goods when the financial constraint index increased by one unit, increasing firm export volume by 0.0769%. Furthermore, the estimation results from logit model regression suggest that at any given point in time, a financially constrained firm is more likely to export than an unconstrained or less constrained firm. Finally, evidence of firm-level heterogeneity is found when a firm has export experience, is large, is foreign-owned, performs processing and assembly for foreign countries, is in an industrial zone, and/or is in a province with high specialization. Based on our findings, we make some recommendations to enterprises and governments to increase firms' export value and foster potential exporters.
This paper focuses on the contribution of labour vis-à-vis capital in the export earnings of the Small Scale Industry (SSI) sector in India over the years from 1975-76 to 2007-08. It is observed that after the economic reforms, the direct exports from the SSI sector accounted for nearly 35 percent of the total exports of India. It is estimated that this sector has registered steady growth in the production and generation of employment. The investment of fixed capital has also registered substantial growth in this sector. It is observed that there is a scope for improvement in the area of utilization of both labour and capital, but more so for labour. Empirical analysis through the two-stage least squares method suggests that capital and the use of better technology play a positive and significant role in the production and export growth of the SSI sector. Labour intensity has similar, but the greater impact on export earnings as compared to capital. Thus, there is a need to focus more on improving the labor Abstract: This paper focuses on the contribution of labour vis-à-vis capital in the export earnings of the Small Scale Industry (SSI) sector in India over the years from 1975-76 to 2007-08. It is observed that after the economic reforms, the direct exports from the SSI sector accounted for nearly 35 percent of the total exports of India. It is estimated that this sector has registered steady growth in the production and generation of employment. The investment of fixed capital has also registered substantial growth in this sector. It is observed that there is a scope for improvement in the area of utilization of both labour and capital, but more so for labour. Empirical analysis through the two-stage least squares method suggests that capital and the use of better technology play a positive and significant role in the production and export growth of the SSI sector. Labour intensity has similar, but the greater impact on export earnings as compared to capital. Thus, there is a need to focus more on improving the labour Abstract: This paper focuses on the contribution of labour vis-à-vis capital in the export earnings of the Small Scale Industry (SSI) sector in India over the years from 1975-76 to 2007-08. It is observed that after the economic reforms, the direct exports from the SSI sector accounted for nearly 35 percent of total exports of India. It is estimated that this sector has registered steady growth in the production and generation of employment. The investment of fixed capital has also registered substantial growth in this sector. It is observed that there is a scope for improvement in the area of utilization of both labour and capital, but more so for labor. Empirical analysis through the two-stage least squares method suggests that capital and the use of better technology play a positive and significant role in the production and export growth of the SSI sector. Labour intensity has similar, but the greater impact on export earnings as compared to capital. Thus, there is a need to focus more on improving the labour
The study investigated the effect of exchange rate volatility on the performance of corporate firms in Nigeria. It also tried to find out the nature of the relationships between exchange rate volatility and profitability (proxied by gross profit) and inflation rate. The study employed secondary data collated from Central bank statistical bulletin and Security and exchange commission. These were analyzed using Auto regressive distributed lag ARDL model. Results indicate a strong negative relationship between exchange rate and profitability of corporate firms operating in Nigeria, and a negative relationship between inflation rate and gross profit of corporate firms in Nigeria. This study recommends that firms should use hedging to guard against exchange rate volatility since this can affect a firm negatively and reduces firm's productivity.
Intense firms’ competition for attracting finance and increasing the market share of production sale, telecommunication and information technology progress in fast transition of money and subscribing the technical and financial information are some important aspects that make the ignorance of open economy profits. In this study, the effect of inflation and financial and trade globalization on income inequality have been examined based on the Stolper–Samuelson, Kuznets and Mandel theories, in countries with high capital intensive and low capital intensive. To do so, data from 2000-2014 and GMM method have been used. The results showed that in both groups of countries, inflation and an increase in financial and trade globalization cause an increase and decrease in income inequality respectively. It also showed that despite this fact that difference in capital intensity does not cause a significant difference in amount and direction of commercial globalization effect on income inequality, but in countries with higher capital intensity, financial globalization has the higher effect on reduction of income inequality.
This paper, by exploring the enriched information in annual Vietnamese enterprise surveys from 2010 to 2015, tries to shed light on the causal effect of the various statuses of export transitions on total factor productivity occurring across 20 manufacturing sectors and during various phases of export transition. The empirical results derived from the system GMM estimation provide evidence of causal direction from export transitions to total factor productivity, after controlling for endogenous variables and taking firm heterogeneity into account. Our results indicate that export effects on productivity are highly dependent on specific manufacturing sectors, and on type of export transition. From the perspective of trade and industrial policies, while supporting the creation of new exporters, some issues related to a high level of subsidy and tax incentives by the government to every exporting firm and export-oriented unit in every manufacturing sector seem to be questionable.
Unter den Begriff Außenwirtschaft können alle ökonomischen Transaktionen zwischen dem Inland und dem Ausland gefasst werden. Diese Transaktionen können von den wirtschaftspolitischen Entscheidungsträgern nach den von ihnen definierten Zielvorgaben beeinflusst werden. Im weitesten Sinne umfasst die Außenwirtschaftspolitik folglich die Gesamtheit aller staatlichen Aktivitäten, die unmittelbar auf die Steuerung dieser außenwirtschaftlichen Transaktionen zielen.1
The research paper talks about the contribution of Labour and Capital in Micro Small and Medium Enterprise Sector's Export earning in India.
The global economic crisis occurred starting from 2008 has deeply marked all the advanced economies: the reduction of purchasing power from the American consumers resulting from the loss of the property values (−25 % only in 2008), the fall of the Stock Exchange values (−40/50 % in the main world Stock Exchanges) which has lead the savers to increase their propensity to save, the fall of value of the Pension Funds in the Anglo-Saxon countries, the tightening of bank credit which has conveyed its reflexes on consumers and enterprises especially in Europe. Such economic and financial worldwide crisis made arousing a second phase of the globalization which is now displaying the change of numerous economic and managerial paradigms, competitive sceneries and relationships among the enterprises. Thus, new competitive rules emerged which, particularly in the emerging economies, are producing complex and variegated effects.
The thesis examines the effect of exchange rate variability on firms' export decisions, using data for UK manufacturing firms. We separately investigate the relationship between the changes of level of exchange rate and exports and that between exchange rate uncertainty and exports. Our results show that export extensive margin is not significantly related to changes in the level of exchange rates, whereas exchange rates have a significant and negative impact on the export intensity. Since industry heterogeneity is important in the effect of exchange rate level changes, we further explore possible explanations. In particular, we test whether external orientation and market structure play a role in the effect. Our results provide significant evidence for the role of external orientation and market structure. We also find significant evidence for the hysteresis effect of exchange rate uncertainty on exports, using new measures of uncertainty. In both cases, the behaviour of multinationals is investigated. We find that multinationals are less likely to be negatively affected by both changes of level of exchange rate and exchange rate uncertainty than indigenous firms.
It contributes to the micro econometric literature in several aspects. Our evidence for industry heterogeneity from UK firm level data is new. Our explanations for industry heterogeneity by testing two hypotheses are the first attempt to investigate the factors driving different effects across industries. New measures of exchange rate uncertainty and related new method are used to test the hypothesis of hysteresis effects of uncertainty on trade. The use of micro data and new measures enable us to overcome the econometric difficulties and problems in previous studies. We also investigate whether multinationals' export behaviour is different from that of indigenous firms in response to exchange rate fluctuations. As far as we know, the multinationals' ability to deal with currency risk has never been examined before. The thesis provides new evidence for the multinationals' advantage of internalising currency risk over indigenous firms under exchange rate movements.
This paper constructs a trade model with heterogeneous firm and cross-country efficiency differences to investigate the impact of trade on asymmetric countries. We show that the trade pattern and composition of trade is determined by the trade off between cross-country size variation and efficiency difference. Opening up to trade increases the productivity threshold to survive and the aggregate industry efficiency in both more efficient and less efficient countries, while the productivity threshold, probability of death and proportion of exporting firms are higher in the more efficient country. As a consequence, trade leads to industry rationalization and consumer welfare gains in both countries but the magnitude is stronger in the more efficient country.
We quantitatively examine the factors which account for differences in innovation output depending on the mode of international activities, employing the innovation accounting framework proposed by Mairesse and Mohnen [2001. To be or not to be innovative: An exercise in measurement. NBER Working Paper No. 8644. Cambridge, MA: National Bureau of Economic Research; 2002. “Accounting for Innovation and Measuring Innovativeness: An Illustrative Framework and an Application.” American Economic Review 92 (2): 226–230]. We find that internationally engaged firms use more innovation inputs and generate more innovation outputs. Firms with R&D establishments abroad show the best innovation performance. A significant part of the higher innovation performance of internationally engaged firms can be explained by their greater intra-firm knowledge spillovers, R&D intensity, perceived competitive pressure, and proximity to basic research. However, more importantly, our innovation efficiency analysis suggests that engagement in international activities increases the sales amount of innovative products though it does not necessarily raise the probability that a firm successfully develops a new product or process.
This paper provides new insights regarding the role of innovation and localisation on the levels and growth of total factor productivity among exporting firms. For that purpose, we establish a dynamic model using data collected from nearly 10,000 Swedish exporting firms over a 12-year period. Different innovation proxies are used, and we distinguish between persistent and non-persistent innovators, while knowledge from outside the firm is measured by a newly developed methodology with detailed spatial resolution. The econometric evidence shows two distinct results. First, persistent innovators benefit significantly more than other exporters from access to a rich spectrum of nearby knowledge. Second, the level of productivity among non-innovative exporters and exporters that are only temporary engaged in innovation is positively affected by externalities in the most knowledge-intense local milieus.
International trade in services although still limited is growing fast. In recent years there have growing concerns in developed economies about its effects on employment and wages. However; systematic empirical evidence on this issue is scarce. In this paper we present a portrait of trade in services using a new dataset for the United Kingdom, the Annual and Quarterly Inquiry into International Trade in Services (ITIS). This dataset collects information on the imports and exports of services at the firm-level. We identify the "causal" relationship from trade in services to productivity, employment and wages. We find that: 1) Services trade appears to have a significant and positive impact on firms' productivity; 2) Imports of services have no significant effect of employment; 3) Some of the productivity improvements are passed onto workers in the form of higher wages. Thus, fears over the effect of service "offshoring" do not appear to be supported by these data. 1 This work contains statistical data from ONS which is Crown copyright and reproduced with the permission of the controller of HMSO and Queen's Printer for Scotland. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. The authors thank the staff of the Business Data Lab at the Office for National Statistics for their help in accessing the data, in particular Joe Robjohns, Rhys Davies and Felix Ritchie. Financial support from the DTI (PCN 0506) and the Leverhulme Trust (under Programme Grant F114/BF) is gratefully acknowledged. The authors thank Chiara Criscuolo, Ralph Martin and Fernando Galindo-Rueda and the other participants in the DTI Workshop on Seed-Funding Projects "Trade and FDI Theme" on the 14 th of March 2006 for comments and suggestions. All remaining errors are our own.
AbstractA popular explanation for China's rapid economic growth in recent years has been the dramatic increase in the number of private domestic‐ and foreign‐owned firms and a decline in the state‐owned sector. However, recent evidence suggests that China's state‐owned enterprises (SOEs) are in fact stronger than ever. In this paper, we examine over 78,000 manufacturing firms between 2002 and 2006 to investigate the relationship between ownership structure and the degree of firm‐level exposure to export markets and firm‐level productivity. Using a conditional stochastic dominance approach, we reveal that although our results largely adhere to prior expectations, the performance of SOEs differs markedly between those that export and those that supply the domestic market only. It appears that China's internationally focused SOEs have become formidable global competitors.
This study examines the effects of export status and export intensity on the performance of firms in Ghana. Our measures of performance include productivity and profitability. Using the Regional Project on Enterprise Development (RPED) dataset covering the period 1991–2002, the results of this study indicate that export status and export intensity have positive effects on productivity, confirming the learning-by-exporting hypothesis. Competition on the international market exposes exporting firms to new technologies, and this has the potential of increasing their productivity. Thus, economic policy initiatives should be directed at encouraging firms to enter the export market. Existing exporters should also be motivated to intensify their exporting efforts by exporting more of their output to foreign markets. © 2011 Wiley Periodicals, Inc.
In this paper, we examine whether firms become productive by learning through exporting. To this end, we estimate the production function using microdata of Indian manufacturing firms operating in the period 1991–2001. In contrast to studies on developed countries, our results provide evidence that Indian manufacturing firms are experiencing a rise in productivity through entering export markets and thus experience the learning effect. We also find that there is a productivity rise prior to exporting. Therefore, our results also support the self-selection mechanism for exporting.
Los vínculos con el exterior pueden conducir a incrementos en la productividad y a la difusión de tecnologías basadas en las habilidades, afectando no solamente la productividad sino también incrementando la demanda por trabajo calificado y los salarios.
Este documento analiza el impacto del uso de insumos intermedios importados, exportaciones e inversión extranjera directa (IED) sobre la productividad, la demanda y los salarios de los trabajadores calificados de las empresas manufactureras uruguayas en el período 1988-2005. Las respuestas de los diversos canales a los vínculos internacionales no son homogéneas, sino que varían de acuerdo a la distribución condicional de cada variable dependiente.
Nuestros resultados preliminares parecen indicar que mayores niveles de vinculación con el exterior están asociados con mayor productividad e incrementos en la demanda de trabajo calificado medido a través de los salarios y el empleo en términos absolutos, aunque no siempre sucede así en términos relativos. Entonces, promover los lazos con el exterior y el entrenamiento de los trabajadores podría conducir a incrementos en la productividad y a mejores oportunidades para los trabajadores calificados mientras otras políticas sociales podrían ayudar a mitigar los efectos de la desigualdad salarial.
This study analyses the main determinants of exports and research and development (R&D) expenses of small and medium enterprises (SME) and large companies operating in Portugal during the period 2004- 2008. From a sample of 200 SMEs and 30 major exporting companies, the study uses a panel data analysis and fixed-effects and random-effects estimators to estimate the effects on exports and on R & D. Regarding exports, the study found a positive effect in terms of increased productivity and R & D in both SMEs and large companies. The results also suggest that SMEs that are owned by foreign enterprises export more than national SMEs. In relation to the determinants of spending on R & D, the study concludes that the increase in equity and net income has a positive effect on R & D spending in large companies, while in SMEs, increased expenditure on R & D is a consequence of increasing exports, whereas the increase in net income has a negative effect on R& D
The propensity score is the conditional probability of assignment to a particular treatment given a vector of observed covariates. Both large and small sample theory show that adjustment for the scalar propensity score is sufficient to remove bias due to all observed covariates. Applications include: (i) matched sampling on the univariate propensity score, which is a generalization of discriminant matching, (ii) multivariate adjustment by subclassification on the propensity score where the same subclasses are used to estimate treatment effects for all outcome variables and in all subpopulations, and (iii) visual representation of multivariate covariance adjustment by a two- dimensional plot.
A growing body of empirical work has documented the superior performance characteristics of exporting plants and firms relative to non-exporters. Employment, shipments, wages, productivity and capital intensity are all higher at exporters at any given moment. This paper asks whether good firms become exporters or whether exporting improves firm performance. The evidence is quite clear on one point: good firms become exporters, both growth rates and levels of success measures are higher ex-ante for exporters. The benefits of exporting for the firm are less clear. Employment growth and the probability of survival are both higher for exporters; however, productivity and wage growth is not superior, particularly over longer horizons.
Increased transmission capacity and diminishing returns to scale in power production capacities have raised the opportunity cost of electricity in many countries. The resulting market changes have often been counteracted by policy, i.e. subsidized electricity prices to for instance energy intensive industries. Firm data, emphasizing cost heterogeneity, confirm that a large share of Norwegian energy intensive firms would not be profitable in the long run if they lose their present electricity subsidies. However, CGE estimates show that removing the subsidies allows a tax cut that is more than sufficient to bring about the changes in relative prices needed to restore internal and external balances.
Exports and Success in German Manufacturing. - While Germany has a very open, export-oriented manufacturing sector, there has been little research on the role of exporting in German firms' performance. This paper documents the significant differences between exporters and non-exporters and attempts to identify the sources of these disparities. Exporters are much larger, more capital-intensive, and more productive than non-exporters. However, the bulk of the evidence suggests that these performance characteristics predate the entry into export markets. The authors find no positive effects on employment, wage or productivity growth after entry. The authors' results provide evidence that success leads to exporting rather than the reverse.
Is there any empirical evidence that firms become more efficient after becoming exporters? Do firms that become exporters generate positive spillovers for domestically-oriented producers in their industry or region? In this paper we analyze the causal links between exporting and productivity using firm-level panel data from three semi-industrialized economies. Representing export market participation and production costs as jointly dependent autoregressive processes, we look for evidence that firms' stochastic cost process shifts when they break into foreign markets. We find that relatively more efficient firms become exporters, and that their costs are not affected by previous export market participation. This implies that self-selection of the more efficient firms into the export market, and not earning-by-exporting, explains the efficiency gap between exporter and non-exporters previously documented in the literature. Further, we find some evidence that exporters reduce the costs of breaking into foreign markets for domestically oriented producers, but do not appear to help these producers become more efficient.
This paper considers whether it is possible to devise a nonexperimental procedure for evaluating a prototypical job training programme. Using rich nonexperimental data, we examine the performance of a two-stage evaluation methodology that (a) estimates the probability that a person participates in a programme and (b) uses the estimated probability in extensions of the classical method of matching. We decompose the conventional measure of programme evaluation bias into several components and find that bias due to selection on unobservables, commonly called selection bias in econometrics, is empirically less important than other components, although it is still a sizeable fraction of the estimated programme impact. Matching methods applied to comparison groups located in the same labour markets as participants and administered the same questionnaire eliminate much of the bias as conventionally measured, but the remaining bias is a considerable fraction of experimentally-determined programme impact estimates. We test and reject the identifying assumptions that justify the classical method of matching. We present a nonparametric conditional difference-in-differences extension of the method of matching that is consistent with the classical index-sufficient sample selection model and is not rejected by our tests of identifying assumptions. This estimator is effective in eliminating bias, especially when it is due to temporally-invariant omitted variables.
Using research designs patterned after randomized experiments, many recent economic studies examine outcome measures for treatment groups and comparison groups that are not randomly assigned. By using variation in explanatory variables generated by changes in state laws, government draft mechanisms, or other means, these studies obtain variation that is readily examined and is plausibly exogenous. This article describes the advantages of these studies and suggests how they can be improved. It also provides aids in judging the validity of inferences that they draw. Design complications such as multiple treatment and comparison groups and multiple preintervention or postintervention observations are advocated.
This paper investigates whether firms learn from exporting, using a panel of 2 105 Chinese industrial enterprises between 1988 and 1992. I find that, controlling for past performance and unobserved firm characteristics, past exports lead to significant improvements in enterprise performance. Interestingly, these learning effects are most pronounced among established exporters. For new entrants to export markets, learning effects are insignificant and occasionally negative.
The propensity score is the conditional probability of assignment to a particular treatment given a vector of observed covariates. Both large and small sample theory show that adjustment for the scalar propensity score is sufficient to remove bias due to all observed covariates. Applications include: (i) matched sampling on the univariate propensity score, which is a generalization of discriminant matching, (ii) multivariate adjustment by subclassification on the propensity score where the same subclasses are used to estimate treatment effects for all outcome variables and in all subpopulations, and (iii) visual representation of multivariate covariance adjustment by a two-dimensional plot.
This paper examines total factor productivity differences between exporting and non-exporting firms. These differences are documented on the basis of a sample of Spanish manufacturing firms over the period 1991–1996. The paper also examines two complementary explanations for the greater productivity of exporting firms: (1) the market selection hypothesis, and (2) the learning hypothesis. Non-parametric tests are proposed and implemented for testing these hypotheses. Results indicate clearly higher levels of productivity for exporting firms than for non-exporting firms. With respect to the relative merits of the selection and the learning hypotheses, we find evidence supporting the self-selection of more productive firms in the export market. The evidence in favor of learning-by-exporting is rather weak, and limited to younger exporters.
This paper presents a dynamic model of the export decision by a profit-maximizing firm. UsingapanelofU.S.manufacturingplants, we test for the role of plant characteristics, spillovers from neighboring exporters, entry costs and government export promotion expenditures. Entry and exit in the export market by U.S. plants is substantial, past exporters are apt to reenter, and plants are likely to export in consecutive years. However, we find that entry costs are significant and spillovers from the export activity of other plants negligible. State export promotion expenditures have no significant effect on the probability of exporting. Plant characteristics, especially those indicative of past success, strongly increase the probability of exporting as do favorable exchange rate shocks.
This paper provides econometric evidence supporting the hypothesis that export behavior cause learning effects. The idea is that exporting firms obtain efficiency gains through a variety of channels, among which are international knowledge and technology spillovers and the exploitation of economies of scale in a larger market. Following the existing literature, learning-by-exporting is modeled as a change, induced by export behavior, in the stochastic process governing firm's productivity. Empirically, this is implemented specifying cross-section regressions of TFP growth on measures of export behavior, controlling for past TFP growth and other firm's characteristics. Using data on a sample of Italian manufacturing firms, it is found, consistently with most previous works, that exporters do not exhibit faster TFP growth. Nevertheless, TFP growth has a positive and significant relation with firm's export intensity. In other words, only firms with a substantial involvement in exporting activity have a significantly higher rate of TFP growth. This result, consistent with a similar work using a sample of Chinese firms, suggests that learning-by-exporting is by no means simply the outcome of the presence into the export market. Indeed, learning requires commitment and experience of foreign activities, which in turn are associated with the relative importance of foreign activities and the length of time since entry in the export market.
This paper presents a review of non-experimental methods for the evaluation of social programmes. We consider matching and selection methods and analyse each for cross-section, repeated cross-section and longitudinal data. The methods are assessed drawing on evidence from labour market programmes in the UK and in the US.
Japanese foreign direct investment (FDI) into China is analysed using an FDI model that accounts for different modes of FDI as well as third country effects and adds to existing literature by incorporating a new measurement of political distance. Political closeness between countries is shown to affect FDI. An improvement in political relations is associated with an increase in FDI by reducing uncertainty in the investment environment. The performance of Japanese FDI into China is shown to be high relative to its potential since the late 1980s. The signing of the bilateral investment treaty in 1988 and China’s WTO accession in 2001 were events that helped reduce uncertainty in bilateral investment, with the latter mitigating the effects of increased uncertainty from rising bilateral political tensions after 2001.
Comparative data for ninety-three countries are used to analyze the robustness of the relationship between openness and total factor productivity growth. Nine indexes of trade policy are used to investigate whether the evidence supports the view that total factor productivity growth is faster in more open economies. The results are robust to the use of openness indicator, estimation technique, time period, and functional form and suggest that more open countries experienced faster productivity growth. Although the use of instrumental variables help dealing with endogeneity, issues related to causality remain somewhat open and require time series analyses to be adequately addressed.
Exporting is often touted as a way to increase economic growth. This paper examines whether exporting has played any role in increasing productivity growth in U.S. manufacturing. While exporting plants have substantially higher productivity levels, there is no evidence that exporting increases plant productivity growth rates. However, within the same industry, exporters do grow faster than non-exporters in terms of both shipments and employment. Exporting is associated with the reallocation of resources from less ecient to more ecient plants. In the aggregate, these reallocation eects are quite large, making up over 40% of total factor productivity growth in the manufacturing sector. Half of this reallocation to more productive plants occurs within industries and the direction of the reallocation is towards exporting plants. The positive contribution of exporters also shows up in import-competing industries and non-tradable sectors.
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
Exposure to International Markets and Corporate Performance: A Literature Review
- N Pain
- Te Velde
Pain, N. and Te Velde, D.W. (2000), Exposure to International Markets and Corporate
Performance: A Literature Review, Report to DTI.
- A Bernard
Is learning by exporting important? Micro-dynamic evidence from Columbia, Mexico and Morocco
- S Clerides
- A Kraay
- B Meyer