Internationalisation and Economic Performance of Enterprises: Evidence from Polish Firm‐level Data

This article provides evidence on the relative performance of internationalised firms using Polish firm‐level data, spanning the period 1996–2005 and covering all medium and large enterprises. We distinguish between three modes of internationalisation: foreign direct investment, exporting and importing of capital goods. Our results point strongly at the superior performance of foreign affiliates vs domestic firms, exporters vs non‐exporters, and importers vs non‐importers: internationalised firms are larger, more capital intensive, pay higher wages and are more productive than purely domestic firms. Foreign ownership is the strongest factor accounting for gains from internationalisation. The premia from exporting are substantially lower, though also significantly positive. The performance of capital goods importers is also higher compared to non‐importers and is to some extent related to their involvement in other types of international activity. The results are robust to the choice of specification and productivity estimator. The analysed enterprises recorded a sizeable and broad‐based productivity improvement over the period under consideration. Not only the initial levels of productivity of exporters, importers and foreign affiliates were on average significantly higher that those of their non‐internationalised counterparts, but they also recorded faster productivity gains (manifested in increasing productivity premia), so that the discrepancies grew even larger. We also perform the analysis of productivity spillovers from internationalised firms onto own, downstream and upstream sectors. We find evidence of significant horizontal and backward spillovers from all three types of international activity. Our results suggest that trade externalities are rather of a horizontal nature, while those related to foreign direct investment operate mainly via backward linkages.     

Export Credit Guarantees and Export Performance: Evidence from Austrian Firm‐level Data

This paper provides an economic assessment of export credit guarantee commitments by the Austrian export credit agency, using firm‐level data on a cross‐section of Austrian exporting firms for the year 2008. In a first step, we explore various determinants of export guarantee usage. Results suggest that firm size, being part of a multinational enterprise, exposure to revenue risk and R&D intensity are important factors. In a second step, we investigate the effects of export guarantees on export performance. Identification is achieved using as instruments the exogenous determinants of export guarantee usage identified in the first step. We find that there are economically and statistically significant effects of export credit guarantee usage on firm‐specific export performance ranging from some 80 to 100 per cent compared with the control group of non‐users.     

Exports and Productivity: A Survey of the Evidence from Firm‐level Data

While the role of exports in promoting growth in general, and productivity in particular, has been investigated empirically using aggregate data for countries and industries for a long time, only recently have comprehensive longitudinal data at the firm level been used to look at the extent and causes of productivity differentials between exporters and their counterparts which sell on the domestic market only. This paper surveys the empirical strategies applied, and the results produced, in 54 microeconometric studies with data from 34 countries that were published between 1995 and 2006. Details aside, exporters are found to be more productive than non‐exporters, and the more productive firms self‐select into export markets, while exporting does not necessarily improve productivity.     

Offshoring and Outsourcing Potentials: Evidence from German Micro‐Level Data

This paper provides two indicators that measure: (i) offshoring potentials (cross‐country geographical relocation) and (ii) outsourcing potentials (organisational relocation) separately at the level of jobs, occupations, tasks and industries. We use four waves of the BIBB/BAuA Labour Force Survey in Germany and apply principal component analysis based on a large set of potential determinants of offshoring and outsourcing derived from the literature. Our results show significant variation across these levels in the determinants of both dimensions. We provide a comprehensive empirical classification of the determinants of how easily jobs can be offshored and outsourced. This can serve as a basis for further research to investigate the economic effects of job offshoreability.     

Offshoring and the Skill‐premium: Evidence from Individual Workers’ Data

During the 1980s the United States has experienced an increase in both international trade and the skill‐premium. The association between these two phenomena has proven elusive in the early empirical literature on the subject. Indeed, the consensus among labour economists seems to be that trade has not been the main cause of such increase in the skill‐premium. This view has been challenged by Feenstra and Hanson (1999, Quarterly Journal of Economics, 114, 3, 907) who find that offshoring sizably affects the skill‐premium. I revisit this debate using individual workers’ data from the March Current Population Survey combined with industry‐level trade data. This strategy improves upon the work of Feenstra and Hanson who do not control for the demographic characteristics of the labour force. In my results, offshoring can explain between 9 and 30 per cent of the increase in the college wage premium, relative to high‐school workers. In addition, I find that offshoring can explain 21 per cent of the increase in the relative employment of skilled labour. These results suggest that offshoring may play an important role in the increase in the relative demand of skilled workers.     

Firm R&D,Absorptive Capacity and Learning by Exporting: Firm‐level Evidence from China

The absorptive capacity of firms developed through R&D promotes learning by exporting. In this paper, we estimate the instantaneous and long‐run productivity effects of exporting on the universe of Chinese manufacturing firms. We find that exporting has very different productivity effects for firms with different pre‐export R&D status. It has large and lasting productivity effects for firms with pre‐export R&D, while it has little effects for firms without pre‐export R&D. Furthermore, the effect of exporting increases with the number of years of pre‐export R&D investment.     

Exporting and Economic Performance: Firm‐level Evidence of Spanish Manufacturing

In a previous paper, Delgado, Fariñas and Ruano (2002) report TFP differences between exporters and non‐exporters on the basis of a sample of Spanish manufacturing firms. In this paper, we extend the previous analysis in three directions using a similar data set. First, we investigate additional economic performance differences between exporters and non‐exporters. Second, we measure TFP differences estimating production functions that control for unobserved heterogeneity and simultaneity bias. Third, we explore the self‐selection and learning‐by‐exporting hypothesis as explanations for the greater performance of exporters. With respect to the results, we confirm that many indicators of economic performance such as productivity, size, wages and innovation are greater in exporting firms. Furthermore, TFP differences between exporters and non‐exporters estimated with parametric methods are remarkably similar to those estimated using index numbers. Finally, performance differences and transition patterns between the export market and the domestic market indicate higher performance for entering exporters with respect to non‐exporters at the moment of entry. We find evidence of selection in the entry and the exit side of the export market. One of the basic results that we obtain indicates that after controlling for self‐selection, the productivity growth of entering exporters does not significantly change with respect to non‐exporters. As the evidence we find indicates no systematic changes in performance between non‐exporters and exporters after entry takes place, we do not confirm the learning‐by‐exporting hypothesis.     

Quantitative Evaluation of the Determinants of Export and FDI: Firm‐level Evidence from Japan

Using firm‐level data for Japan, this paper examines the determinants of the export and foreign direct investment (FDI) decision. We contribute to the literature by employing a mixed logit model, i.e. a multinomial logit model with random intercepts and random coefficients, to incorporate any unobserved firm heterogeneity and by paying special attention to the quantitative significance of the determinants. We find that while the impact of productivity on the export and FDI decision is positive and statistically significant, it is economically negligible. The effect of firm size, credit constraints and information spillovers from experienced firms is also small in magnitude. A quantitatively dominant determinant of the export and FDI decision is instead the prior status of firms in terms of internationalisation. In addition, the use of the mixed logit model enables us to find a substantial role of unobserved firm characteristics in internationalisation of the firm. These findings suggest that entry costs to foreign markets, which substantially vary in size across firms, play an important role in the export and FDI decision. In addition, given that the negligible effect of productivity and the dominant effect of prior status appear to be more prominent in Japan than in some other countries, this study helps highlight the uniqueness of Japanese firms.     

Exporting and Environmental Performance: A Firm‐level Productivity Analysis

The objective of this paper is to study empirically the relationship between export orientation and firms’ environmental performance from different perspectives of trade theory. On the one hand, productivity heterogeneity is analysed within the new trade‐theoretical framework. The approach followed is to determine firm‐level productivity components, including an environmental productivity indicator (as a performance measure) and taking as reference the Spanish food industry. On the other hand, from the traditional comparative advantage perspective, this study also develops an export performance model to evaluate the effect of technology, environmental variables and factor endowment on exporting. The results show greater environmental productivity and corporate efficiency for export‐oriented firms. Our findings also determine the positive effect on firms’ export intensity of environmental performance as a factor of specialisation and technology proficiency.     

Exporters and Importers of Services: Firm‐Level Evidence on Italy

This work contributes to the growing literature on international trade in services at firm level. Our data set provides information on exports and imports of services (excluding transportation and travel) in 2008–09 for almost 3,000 Italian industrial and services firms, divided by partner country and type of service. We report a set of stylised facts on services trade and analyse the choice between export and foreign direct investment in services at the firm level. We find that the export and import of services are highly concentrated in just a few firms. Firm‐level variation in trade is positively correlated with firm size and productivity. Country‐level variation is to a large extent explained by the standard gravity variables: distance strongly reduces trade in services in spite of their intangibility. Smaller and less productive firms choose to export rather than sell through foreign affiliates, although there is some heterogeneity among service types.     

Technical Progress and Labour Demand in Swedish Manufacturing Firms

Controlling firms’ sales in the labour demand model, this paper investigates effects of trade and R&D via technical progress on labour demand in a dynamic framework, based on a panel of Swedish manufacturing firms for 1990s. The main results of this study indicate that employment elasticities with respect to different characteristics of firms (wages, total sales, exports and R&D efforts) and industrial import penetration could vary across respective skilled sectors. There is some indication to that import penetration from fourteen ‘old members’ of European Union could induce capital-saving technical progress and result in the rise in demand for labour for firms in medium-low skilled sector, whilst those from the ten ‘new members’ of European Union could induce x-efficiency and labour-saving technical progress for firms in low-skilled sector. Furthermore, the effects of R&D intensity on demand for labour are positive and significant for firms in medium-high-skilled and high-skilled sectors.

Productivity and Learning‐by‐exporting: A Firm‐level Analysis of Indian Manufacturing

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.     

The Effects of Offshoring on Post‐displacement Wages: Evidence from the United States

This paper studies the effects of offshoring on post‐displacement wages using a large and nationally representative sample of US workers displaced from a manufacturing industry during the 1990s. The empirical results based on Mincerian regressions of individual re‐employment earnings on industry‐level offshoring proxies, show that the effects of offshoring on post‐displacement wages are negative, although not economically large. The preferred specifications suggest, in fact, that a one percentage point increase in offshoring in the pre‐displacement industry reduces earnings on the new job by approximately 0.3–0.6 per cent. These figures imply that the cumulative rise in offshoring over the sample period may have led to a drop of between US$110 and US$330 in the yearly re‐employment wages of US displaced workers. While the magnitude of the effect is largely independent of individual characteristics such as gender, age, occupation and educational level, it does depend on the duration of non‐employment and on workers’ industrial reallocation after displacement. In particular, the effects are relatively stronger for individuals who stay longer before finding a new job, as well as for those who leave the pre‐displacement industry after the job loss.     

External Debt,Labour Productivity Growth and Convergence: Evidence from Sub‐Saharan Africa

Sub‐Saharan Africa (SSA) has long suffered from lagging productivity and excessive levels of indebtedness. Using both parametric and non‐parametric techniques, this paper examines the impact of external debt on labour productivity growth and convergence across SSA economies over the period 1970–2010. The results indicate the presence of debt‐overhang effects, regardless of model and sample specification. Debt reduction through the Heavily Indebted Poor Countries and Multilateral Debt Relief initiatives enhanced growth but was not successful in offsetting the debt‐overhang effects. Moreover, excessive levels of external debt were responsible for divergence in output per worker over the early 1990s. Although this trend was reversed over the 2000s, reduction in debt through the debt relief initiatives seems to have been insufficient in helping heavily indebted countries in SSA catch up with the labour productivity levels of the best‐performing economies in the region.     

Service Offshoring and Productivity: Evidence from the US

The practice of sourcing service inputs from overseas suppliers has been growing in response to new technologies that have made it possible to trade in some business and computing services that were previously considered non‐tradable. This paper estimates the effects of offshoring on productivity in US manufacturing industries between 1992 and 2000. It finds that service offshoring has a significant positive effect on productivity in the United States, accounting for around 10 per cent of labour productivity growth during this period. Offshoring material inputs also have a positive effect on productivity, but the magnitude is smaller accounting for approximately 5 per cent of productivity growth.     

The great trade collapse and the Spanish export miracle: Firm‐level evidence from the crisis

We provide novel evidence on the microstructure of international trade during the 2008 financial crisis and subsequent global recession by exploring a rich firm‐level data set from Spain. The focus of our analysis is on changes at the extensive and intensive firm‐level margins of trade, as well as on performance differences (jobs, productivity and firm survival) across firms that differ in their export status. We find no adverse effects of the financial crisis on foreign market entry or exit, but a considerable increase in the export intensity of firms after the financial crisis. Moreover, we find that exporters were more resilient to the crisis than non‐exporters. Finally, while exporters showed a significantly more favourable development of total factor productivity after 2009 than non‐exporters, aggregate productivity declined substantially in a large number of industries in Spanish manufacturing. We also briefly explore two factors that might help explain the surprisingly strong export performance of Spain in the aftermath of the great trade collapse: improved aggregate competitiveness due to internal and external devaluation and a substitutive relationship between domestic and foreign sales at the firm level.     

Offshore Outsourcing and Non‐production Workers: Firm‐level Relationships Disaggregated by Skills and Suppliers

In analysing the impact of offshoring on the skill composition, previous empirical studies have established that offshoring firms employ more non‐production workers. However, not all non‐production workers are highly skilled. This paper disaggregates non‐production workers into the following three categories: (i) skilled non‐production workers, (ii) unskilled non‐production workers and (iii) non‐production workers with special skills for offshoring and other overseas business management. By linking our offshoring survey data with firm‐level data for Japanese manufacturing firms, this paper finds that the share of skilled non‐production workers tends to be significantly high in offshoring firms but that of unskilled non‐production workers is not. As offshoring has expanded from production to non‐production tasks, this result implies that the distinction between skilled versus unskilled workers becomes critical among non‐production workers. Using our unique data on supplier types in offshoring, this paper finds that the share of non‐production workers for the management of overseas activities tends to be high in foreign direct investment firms and in firms outsourcing to foreign independent suppliers, but not in Japanese firms outsourcing to offshore suppliers located abroad but owned by other Japanese firms. This difference indicates that coordination burdens are likely to be at least partly mitigated by common languages or shared business practices. These findings suggest that offshoring has different impacts on employment depending on suppliers and the worker’s skill. The principal results are confirmed robust even after various firm characteristics are controlled for in panel regressions, though we should not give any causal interpretations.     

Domestic vs. International Spillovers: Evidence from Swedish Firm Level Data

This paper investigates the association between total factor productivity growth and the R&D expenditures of Swedish manufacturing firms in the presence of domestic- and international R&D spillovers. The paper assumes that the principal channel of transmission of new technology is through I/O relations. Econometric evidence suggests that international as well as domestic inter-industry R&D spillovers are important determinants of firms’ productivity growth in the long run. The R&D spillovers generated within the industry and following I/O links seem to be of minor importance in explaining productivity growth. It seems likely that within-industry productivity spillovers follow other channels than I/O flows, such as horizontal spillovers through copying of new products and processes, or labour turnover. The use of a convergence parameter is one way to check for such within-industry technology flows. Our results indicate that a catch-up process exists by which the non-frontier firms in the Swedish manufacturing sector absorb knowledge spillovers from the leading firms in the industry. Finally, a firm’s own R&D efforts are found to be more or less positively correlated with the TFP growth, maybe the contribution from R&D efforts in some sense are underestimated.     

Services Offshoring and its Impact on Productivity and Employment: Evidence from Germany, 1995–2006

Economists have recently recognised services offshoring as an important influence on domestic labour market outcomes. Services are of particular interest since their significance has grown in terms of both quantity and quality. Only one and a half decades ago, most services were considered non‐tradable, but the emergence and development of new information and communication technologies has made many services internationally tradable. The liberalisation of international trade in services trade has further accelerated the volume of services trade. Our econometric estimations focus on services offshoring by German manufacturing sectors. We use revised input–output data from 1995 to 2006. We first estimate the impact of services offshoring on labour productivity. We then measure the effects of services offshoring on labour demand. The results show that services offshoring increased sectoral labour productivity, but reduced German manufacturing employment. The overall results suggest that labour demand decreased over 1995–2006, because labour‐reducing productivity and substitution effects dominated labour‐augmenting scale effects from services offshoring.     

Determinants of the Physical Demand for Gold: Evidence from Panel Data

Although the role of gold in the world economy has declined since the gold standard was abandoned, it remains important as a central bank reserve, a hedge against risks, a barometer of geopolitical uncertainty, and an input for jewellery. While portfolio demand for gold has been well studied, determinants of physical demand are less understood. Certain emerging‐market countries such as China and India import substantial amounts of gold, with several factors that may contribute: low financial development, need for precautionary savings and/or strong cultural valuation of gold itself. This article uses panel data on gold imports of 21 countries to examine determinants of physical demand. We find that determinants of physical demand differ from those of portfolio demand, and that they differ between the developed and developing worlds.