FIRM HETEROGENEITY AND EXPORTS: EVIDENCE FROM GREEK FIRMS Kyriakos - - PowerPoint PPT Presentation

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FIRM HETEROGENEITY AND EXPORTS: EVIDENCE FROM GREEK FIRMS Kyriakos - - PowerPoint PPT Presentation

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FIRM HETEROGENEITY AND EXPORTS: EVIDENCE FROM GREEK FIRMS Kyriakos Drivas University of Piraeus Margarita Katsimi Athens University of Economics and Business International Atlantic Economic Conference on "Greece: Economic Adjustment,

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FIRM HETEROGENEITY AND EXPORTS: EVIDENCE FROM GREEK FIRMS

Kyriakos Drivas

University of Piraeus

Margarita Katsimi

Athens University of Economics and Business

International Atlantic Economic Conference on "Greece: Economic Adjustment, Prospects and Challenges" Athens, March 27-30, 2019

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In the last decade the Greek economy…. 2009 Current Account (%GDP)

  • 12.5
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In the last decade the Greek economy…. 2009 Current Account (%GDP) Fiscal Balance (% GDP)

  • 12.5
  • 15.1
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In the last decade the Greek economy…. 2009 Current Account (%GDP) Fiscal Balance (% GDP)

  • 12.5
  • 15.1

Twin Deficits Fiscal Crisis

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In the last decade the Greek economy…. 2009 Current Account (%GDP) Fiscal Balance (% GDP)

  • 12.5
  • 15.1

Twin Deficits Fiscal Crisis Economic Adjustment

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In the last decade the Greek economy…. 2009 Current Account (%GDP) Fiscal Balance (% GDP)

  • 12.5
  • 15.1

Twin Deficits Fiscal Crisis Economic Adjustment 2018 Current Account (%GDP) Fiscal Balance (% GDP)

  • 2

0.6

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In the last decade the Greek economy…. 2009 Current Account (%GDP) Fiscal Balance (% GDP)

  • 12.5
  • 15.1

Twin Deficits Fiscal Crisis Economic Adjustment 2018 Current Account (%GDP) Fiscal Balance (% GDP)

  • 2

0.6

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Is the improvement in the current account sustainable? Is external adjustment robust to high growth?

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Necessary condition: Export based growth Is the improvement in the current account sustainable? Is external adjustment robust to high growth?

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Competitiveness

  • In terms of competitiveness gains Greece outperformed

Euro area

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Export performance

  • In terms of exports of goods Greece did not perform better

than Euro area if oil is not included.

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  • However, economic recovery will boost imports
  • Export performance may not be sufficient to ensure that

low CA deficits will continue in good times

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  • However, economic recovery will boost imports
  • Export performance may not be sufficient to ensure that

low CA deficits will continue What determines the export performance of Greek exporting firms?

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The importance of firm heterogeneity

  • Given the importance of exports for sustainable growth an extensive theoretical and empirical literature

attempts to explore and explain the behavior of exporting firms.

  • The availability of micro datasets on firms allowed the departure from the assumption of a representative

firm within each industry.

  • Empirical research with firm-level data has to a large extent replaced the traditional approaches with

standard trade statistics at the product level.

  • This literature indicates that firm heterogeneity affects trade and can be influential for aggregate outcomes
  • For surveys see Bernard et al. (2007. 2012), Redding (2011), Melitz and Trefler (2012) and Melitz and

Redding (2014)

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This literature documented a number of empirical facts:

  • More productive firms export with a higher probability and have higher

export revenue [Bernard & Jensen (1995). Melitz & Redding (2014)]

  • Larger firms export more. to more markets [Bernard. Redding & Schott (2007)]
  • Exporters pay higher wages and are more skill intensive [Yeaple (2005).

Verhoogen (2008)]

  • There is a strong link between exports and innovation at the firm level

[Aw. Roberts and Xu (2011). Arndt (2012). Aghion. Bergeaud. Lequien & Melitz (2018). Chalioti.

  • Drivas. Kalyvitis & Katsimi (2018)]
  • Financial Conditions are important to exporters [Manova (2013). Feenstra.
  • Feenstra. Li & Yu (2014). Dinopoulos. Kalyvitis & Katsimi (2017)]
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Evidence from Greek Exporting Firms

  • what & where is exported?
  • who exports?
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Evidence from Greek Exporting Firms

  • what & where is exported?

who exports?

  • why?
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Evidence from Greek Exporting Firms

  • what & where is exported?
  • who exports?
  • why?

Policy implications

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We use a newly compiled dataset on Greek exporting firms that merges data from three main sources for 2003-2015.

  • Trade data at the firm-product-destination level from the

Intrastat/Extrastat databank (ELSTAT).

  • Firm-level variables from the Annual Manufacturing Survey (ELSTAT).
  • Financial variables from the ICAP database which collects balance

sheet and financial information on Greek firms.

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Greek exporting firms 2003-2015

Intrastat Extrastat Ιcap AMS

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The number of exporting firms decreased during the crisis….

  • …….but remaining or new firms export more

18000 18500 19000 19500 20000 20500 21000 21500 22000

Number of exporters Average value of exports per firm (bil. €)

2 4 6 8 10 12

all exporters permanent exporters

  • excl. oil firms
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More products per firm

  • the number of products exported by Greek firms

increases over time

Number of products and the size of the firm

2 4 6 8 10 12 14 16 large medium small

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The importance of “top” product

  • On average 68% of form’s exports concerns the “top "

product

Firms that export > 1 product (% total firms) and "top product" exports (% of exports)

60% 65% 70% 75% top product exports of firms with >1 product (% total firm's exports) percentage of firms that export >1 product

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The importance of new markets

  • exports are increasing through access in more export

markets. Exports by destination and number of destinations

(per company)

1 2 3 4 5 6 7 8 9 0.0 0.1 0.2 0.3 0.4 0.5 average export value per destination number of destinations

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Geographical breakdown of the top 10 destinations

The majority of export firms does not export to leading export

destinations of the country

Destination % exports % firms 2015 1ος Italy 0.11 0.17 2ος Germany 0.07 0.19 3ος Turkey 0.07 0.09 4ος Cyprus 0.06 0.30 5ος Bulgaria 0.05 0.25 6ος USA 0.05 0.14 7ος United Kingdom 0.04 0.11 8ος Egypt 0.04 0.07 9ος Lebanon 0.03 0.04 10ος Saudi Arabia 0.03 0.03

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Size matters

Exports are made by a small number of very large firms

  • a firm belonging to the 1% of firms with higher exports, exports on average
  • ver 100 times more than the rest of the firms (99%)

The concentration holds even without oil exporters

a firm belonging to the 1% of firms with higher exports, exports on average

  • ver 60 times more than the rest of the firms (99%)
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Concentration is increasing

Average value of exports of large firms to the remaining firms

All exporting firms 1%/99% 5%/95% 2003 67.8 49.2 2006 99.2 60.3 2009 67.2 44.7 2012 179.9 91.3 2015 135.0 74.8 Period average 123.3 69.1

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5 10 15 20 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 2003 2006 2009 2012 2015

Number of products and firm size

3 6 9 12 15 18 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 2003 2006 2009 2012 2015

Number of destinations and firm size

Size matters: number of products and destinations

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Exporters and skills

  • Exports are related to skills

Skill premium και and exports per firm (bil. €)

1 2 3 4 5 6 high bonus medium bonus low bonus

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The importance of innovation

  • firms with patents on export markets have perform better

1 2 3 4 5 6 7 πριν μετά

before

after

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But the integration of advanced technology in exports is low….

  • 0.4
  • 0.2

0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 2001 2005 2010 2015 2016 Ελλάδα Πορτογαλία Ισπανία Ιταλία

The Economic Complexity Index (ECI) reflects the degree to which exports are knowledge-intensive

Greece Portugal Spain Italy

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Credit rating of exporting firms (ICAP)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 high credit rating medium credit rating low credit rating

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Who was “hurt” by the crisis?

  • the crisis has affected mainly smaller export firms
  • 30-35% of Greek exporting firms “exit" the export market

in the period 2008-2014

  • the reduction in the number of exporting firms was

compensated by the ' entry' of new firms (at 90% on average)

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Export value (sample period 2003-2015) (1) (2) (3) (4) (5) (6) (7) Total assets 1.093*** 0.933*** 0.907*** 0.892*** 0.790*** 0.747*** 0.860*** (25.76) (18.10) (16.91) (15.94) (4.66) (4.52) (4.50) Productivity 0.506*** 0.526*** 0.479*** (5.92) (5.87) (5.17) Skill 0.674*** 0.715*** 1.078** 1.050** 0.211 premium (5.82) (5.93) (2.28) (2.27) (0.39) Financial 0.558*** 1.184*** Rating (4.98) (3.28) R&D 0.372** 0.445*** Employment (2.38) (2.92) Financial 1.216*** 0.944** Rating (t-1) (3.79) (2.38) R&D 0.355** Employment (t-1) (2.38) Year FE YES YES YES YES YES YES YES N 8771 8763 8382 7404 451 443 356

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Policy implications

SIZE HUMAN CAPITAL INNOVATION FINANCING

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Thank you for your attention