Evidence on services trade from UK firm level data

Size: px

Start display at page:

Download "Evidence on services trade from UK firm level data"

Irene Dora Cox
6 years ago
Views:

1 Evidence on services trade from UK firm level data Chiara Criscuolo CEP and LSE and Holger Breinlich University of Essex and CEP OECD Technical Workshop on Trade Barrier Assessment Methodology Paris, 12 December 2008

2 Why firm level data? Recent models of international trade have recognised the importance of heterogeneity across firms Empirical evidence has shown that only some firms trade Firm level evidence has shown that trade liberalization affects different firms in different ways (winners and losers) Important for policy! Most of the empirical research focuses on trade in goods

3 Firm level trade data. Measurement issues Where do we get the info on trade in goods? Customs records Match with rich Census type data on production Issue: presence of intermediaries (e.g. wholesale sector) Where do we get info on trade in services? Need to ask firms directly data to compile Balance of Trade statistics Issue: transfer pricing

4 Services and Services Trade Services are different from goods Intangible Nonstandardised and tailored (differentiated) Nonstorable Joint production requirement Services more difficult to trade than goods Nonstorable, joint production requirement But trade generally believed to be getting easier due to technological progress (telecommunications etc.) Are there qualitative differences with the evidence found for goods trade?

5 Stylised facts about goods trade Few firms trade Goods traders are bigger and more productive Trade is concentrated among the biggest traders Most firms trade with few countries and in few products

6 How common is trade? Nontraders Only exporters Only importers Two-way traders Number of Firms in ARD Share of firms, (%) Firm export intensity, Firm import intensity, % 0.0% 0.0% % 30.9% 0.0% % 0.0% 9.1% % 27.1% 12.4% Source: ONS (ARD, 2005)

7 Share of sector Number and share of firms in total trade (1) (2) (3) (4) (5) (6) Number EnoI InoE I&E Exports Imports in ARD Mining % 3.75% 8.58% 0.53% 0.46% Low/ med tech manuf % 2.13% 3.73% 2.56% 3.46% High tech manuf % 4.04% 5.86% 9.49% 8.22% Construction & Utilities % 1.14% 0.32% 0.13% 0.51% Wholesale & Retail % 2.24% 1.36% 7.66% 10.78% Other Services % 1.23% 1.17% 31.64% 37.31% Computer & R&D % 4.49% 3.36% 10.46% 9.92% Business Services % 2.07% 3.55% 37.54% 29.35% Source: ONS (ARD, 2005)

8 Top exporters by export value Share of Exports, Share of Employment, Share of Value Added, Top 1% 73.90% 4.59% 9.22% Top 5% 87.03% 7.17% 13.57% Top 25% 96.66% 9.45% 16.54% Top 50% 99.37% 10.72% 18.22% All Exporters % 12.33% 19.95% Top importers by import value Share of Imports, Share of Employment, Share of Value Added, Top 1% 79.33% 2.91% 7.99% Top 5% 90.58% 5.29% 12.46% Top 25% 98.99% 13.91% 20.28% Top 50% 99.80% 15.80% 22.42% All Importers % 16.91% 23.50% Source: ONS (ARD, 2005)

$Even traders trade only a relatively small fraction of their output (especially for imports).$

9 How common is trade? There are few services traders (fewer than goods traders). Even traders trade only a relatively small fraction of their output (especially for imports). Services traders are present in all sectors of the UK economy; frequency of trading often higher in non-services sectors. Trade is concentrated among a few firms.

10 Who are the Services traders? Services traders are different from other firms Larger in terms of employment, turnover, value added More capital and skill intensive and more productive More likely to be foreign owned/part of a UK MNE Biggest premia for two-way traders Comparison with goods exporters Firms exporting both goods and services: highest premia apart from skills and TFP. Services-only vs. goods only: smaller, less likely to be foreign owned but more productive and significantly more skill-intensive.

11 Number of firms Export and Import Patterns (ARD-ITIS) Exports: Slope=-2.0; R 2 =0.93 Imports: Slope=-2.1; R 2 = Number of markets served firms_per_nodest_import firms_per_nodest_export Source: ONS (ARD-ITIS, )

12 Looks familiar? Exports: Slope=-2.5 Source: Eaton et al. (2004)

13 EXPORTS Log(exp.) Log (export dest.) Log(serv. exported) Log(exp per dest/ serv) Log(employment) (27.84)** (13.60)** (7.13)** (21.08)** Log(labour prod.) (23.16)** (16.32)** (6.78)** (16.74)** Observations R-squared Imports Log(imp.) Log (source countries) Log(serv. imported) Log(imp per dest/ serv) Log(employment) (32.00)** (14.18)** (7.92)** (22.65)** Log(labour prod.) (23.66)** (14.46)** (7.79)** (15.72)** Observations R-squared Fixed effects Year, 3-digit industry Source: ONS (ARD-ITIS, )

14 Export and Import Patterns (ARD-ITIS) Most firms trade with only a few countries and in a single service type. Bigger and more productive firms trade with more countries, in a larger number of services and more per country/service. DIFFERENT FROM GOODS TRADE: Impact of size, productivity on firm exports and imports works mainly through the intensive margin.=>countryspecific sunk costs relative more important than marginal costs?

Concentration across and within firms Similarly to goods traders, trade and

..... export to and import from many markets.... trade in many services types.

its main destination. The main export service type accounts for 94%.

15 Concentration across and within firms Similarly to goods traders, trade and economic activity is concentrated among firms which export to and import from many markets.... trade in many services types. But trade is also concentrated within firms: The average firm exports 68% to its main destination. The main export service type accounts for 94%. The primary market/service are also dominant for firms trading with many countries and in many service types.

16 Thank You

DISCUSSION OF: MARGINS OF SERVICE TRADE: THE GERMAN CASE

DISCUSSION OF: MARGINS OF SERVICE TRADE: THE GERMAN CASE Patrocinio Tello Banco de España COMPNET. THE COMPETITIVENESS RESEARCH NETWORK Paris 21st of September 2012 MOTIVATION (I) The increasing importance