1 exports and productivity link in manufacturing: microeconomic evidence from croatia gorana...
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Exports and Productivity Link in Manufacturing: Microeconomic Evidence
from Croatia
Gorana Lukinić ČardićDubrovnik, June 23, 2010
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Outline
Introduction Croatian exports: macroeconomic view Structural features of Croatian exporters Methodology Results Conclusion
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Introduction
"Productivity isn't everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.“ Paul Krugman
Croatian economy characterized by macroeconomic stability but deteriorating external position
Paper presents microeconomic data on Croatian exports, focusing on the link between productivity and exports
Significant evidence on exporter premium: exporters are on average larger, more productive, pay higher wages, etc.
Self-selection vs. learning-by-exporting hypothesis
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Low competitiveness of Croatian merchandise exports
0
5
10
15
20
25
BG CZ
HU PL RO SI SK HR
%
2000-2004 2005-2008
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
BG CZ
HU PL RO SI SK HR
EUR
2000-2004 2005-2008
Annual growth rate of exports (%) Exports per capita (EUR)
Source: Eurostat
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Factors behind weak results
lack of investment in the creation of advanced products, low level of competition in innovation and investment in R&D, the lack of more “demanding” domestic market (Mikić, 2002)
slow implementation of reforms, bureaucratic obstacles, problems with the judiciary, unregulated land registry (Teodorovic and Buturac, 2006)
delay in the process of Croatian accession to the EU (Škuflić, 2005)
….
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Who exports in Croatia? (i)
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57
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61
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65
2002 2003 2004 2005 2006 2007
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Exporter Participation Rate (%) Export Intensity (%) - right
Exporter participation rate and export intensity
Source: own calculations based on FINA database
Exporter participation rate is the ratio between the number of exporters and the total number of enterprises.
Export intensity is the average share of exports in total sales of exporters.
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Who exports in Croatia? (ii)
Majority of Croatian exporters are small firms – they accounted for almost 70 percent of exporters in 2007
But the bulk of total exports is realized by large firms that have the highest export intensity, which was on average around 40 percent
According to ownership structure, privately owned enterprises dominate
Most of the exporters (around 80 percent) belong to low and medium-low technology industries
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Who exports in Croatia? (iii)
Concentration indicators
Source: own calculations based on FINA database
2002 2007 2002 2007 2002 2007 2002 2007
Exports 0,87 0,88 2,31 2,39 27,21 31,41 72,79 68,59
Employment 0,71 0,70 1,23 1,19 19,15 13,30 80,85 86,70
Sales 0,81 0,82 2,03 2,17 37,81 35,25 62,19 64,75
Gini Theil total
Theil % between sectors
Theil % within sectors
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Transition matrix
t t+1 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 average
N 73,7 78,4 79,2 76,4 80,2 77,6
E 26,3 21,6 20,8 23,6 19,8 22,4
N 18,0 16,9 15,5 15,1 16,2 16,3
E 82,0 83,1 84,5 84,9 83,8 83,7
N
E
Values show percentages.
N stands for non-exporter and E for exporter.
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Estimation methodology
Exporter productivity premium:
LP is labour productivity EDUM is a dummy variable for the exporter status CONTROL is a vector of control variables: dummy variables for each
year and industry at the two-letter level, firm size (assets or dummy for firm size according to official classification)
OLS regression on panel data: without and with fixed effects
itititit ecCONTROLEDUMLP ln
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Estimation methodology (ii)
Self-selection hypothesis:
Learning-by-exporting hypothesis:
ititititit ecCONTROLEDUMLPLP lnln )3,2(1
itititit ecCONTROLEDUMLP )3,2(1)3,2(1ln
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Results: exporter productivity premium
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8
EDUM 0,1295 0,1088 0,1378 0,1081 0,0435 0,0415 0,0451 0,0419
Transf. coeff.* 13,8 11,5 14,8 11,4 4,4 4,2 4,6 4,3
t-statistic 9,6280 8,0557 9,3462 7,2877 4,2500 4,0850 3,7251 3,4794
P-value 0,0000 0,0000 0,0000 0,0000 0,0000 0,0000 0,0002 0,0005
Notes:
Labour productivity LP1 LP1 LP2 LP2 LP1 LP1 LP2 LP2
Fixed effects - - - - + + + +
Size: assets + - + - + - + -
Size: dummy - + - + - + - +
All coefficients are statistically significant.
Robustness checks: sample of firms with more than 20 employees; sample without small exporters; sample without occasional exporters
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Results: self-selection hypothesis
No coefficient is statistically significant.
The dependent variable is labour productivity defined as the ratio of sales and employment. Firm size is measured by their assets.
Beginning Comparison Number of Number of Estimated Transf. t- P-
year year observations beginners coefficient coefficient statistic value
2004 2003 628 25 -0,0585 -5,7 -0,3905 0,6963
2002 588 13 0,21139 23,5 1,0149 0,3105
2005 2004 597 19 0,2755 31,7 1,6176 0,1036
2003 615 12 0,1381 14,8 0,6449 0,5192
2002 586 11 0,2105 23,4 0,9279 0,3538
2006 2005 595 28 0,1158 12,3 0,8252 0,4096
2004 601 23 0,1499 16,2 0,9482 0,3434
2003 615 12 -0,1664 -15,3 -0,7681 0,4427
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Results: learning-by-exporting hypothesis
Comparison Number of Estimated Transf. t- P-
year observations coefficient coefficient statistic value
LP1 t+1 2206 0,0462 4,7*** 3,2421 0,0012
growth t+2 992 0,0670 6,9** 2,3519 0,0189
LP1 t+1 2691 0,1584 17,2*** 4,1208 0,0000
level t+2 1918 0,2184 24,4*** 4,1239 0,0000
The dependent variable is labour productivity defined as the ratio of sales and employment. Firm size is measured by their assets.
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Conclusion
Rich structure of exports is hidden behind aggregate data
Exports are more concentrated than sales and employments: within-sector concentration in line with the new new trade theory
Robust estimates of exporter productivity premium
Ambiguous evidence on the self-selection and learning-by-exporting hypothesis
Many possibilities for improving the estimates and for further research
