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mayer-efim-blueprint-2007 section 1 and 2.pdf

mayer-efim-blueprint-2007 section 1 and 2.pdf - The happy...

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The happy few: the internationalisation of European firms New facts based on firm-level evidence BY THIERRY MAYER AND GIANMARCO I.P. OTTAVIANO BRUEGEL BLUEPRINT SERIES
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Contents Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 2 Internationalisation is for the few . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 2.1 Superstar exporters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 2.2 Export intensity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 2.3 Meet the ‘margins’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 3 The talent of internationalised firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 3.1 Exporters’ and FDI-makers’ premia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 3.2 Learning by exporting and investing abroad? . . . . . . . . . . . . . . . . . . . . . . . .23 3.3 Tougher markets are for large exporters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 4 The margins of exports and FDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 4.1 Firm margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 4.2 Product margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 4.3 Price and quantity margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 4.4 The margins of exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 4.5 The margins of FDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 5 Intra-industry reallocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 6 Firm productivity and industry specialisation . . . . . . . . . . . . . . . . . . . . . . . . . . .47 7 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50 7.1 Policy implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 7.2 Policy questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52 Appendix A: Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Appendix B: Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 EFIM 2007 CONTENTS
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Appendix C: TFP estimation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69 Appendix D: Gravity regression . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Internationalisation is for the few . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 The talent of internationalised firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76 The margins of export and FDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79 Intra-industry reallocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 EFIM 2007 CONTENTS
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Foreword “Le bon Dieu est dans le detail” (God is in the details) Gustave Flaubert (1821-80) Nations do not trade; it is firms that trade. This simple truth makes it clear that understanding the firm-level facts is essential to good policy making in Europe. What are the features of European firms that successfully compete in international markets? To what extent do they contribute to productivity and employment? What are the policies that can improve a nation’s foreign trade performance? What policies can promote the participation of other European firms that are currently excluded from international markets? Which are the gains and the adjustments involved in reducing barriers to trade and foreign direct investment (FDI)? What policies can best maximise gains and smooth adjustments? While these questions are best treat- ed using firm-level trade and (FDI) data, until very recently various constraints on data availability and data processing prevented policy researchers from looking at the firm-level evidence. That has begun to change. To take advantage of this, Bruegel and the Centre for Economic Policy Research (CEPR) have joined forces to establish a network of European research teams working on firm-level data and international issues. The network is called EFIM, short for European Firms and International Markets. Gianmarco I.P. Ottaviano for Bruegel and Thierry Mayer for CEPR have provided enthu- siastic leadership to this project. The founding partners were the Centre d'Études Prospectives et d'Informations Internationales (France), the Hungarian Academy of Sciences (Hungary), the Centro Studi Luca d’Agliano (Italy), the Institute for Applied Economic Research (Germany), the Leverhulme Centre for Research on Globalisation and Economic Policy (United Kingdom), Stockholm University (Sweden). EFIM now includes also the National Bank of Belgium (Belgium) and the University of Oslo (Norway) 1 .
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