The performance of NZ exporters: Some firm-level evidence

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16 Νοε 2013 (πριν από 3 χρόνια και 9 μήνες)

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The performance of NZ exporters:


Some firm
-
level evidence


Richard Fabling


Motu Public Policy Seminar, December 2007

Outline


Motivation


Theory


NZ

data

&

results


Future

work


Motivation


Concerns about NZ export performance:



Exports have grown little in volume or value over the last 30
years, and our performance is well behind that of similar OECD
countries




Export Year 2007 is part of the Government’s wider Economic
Transformation Agenda to forge an export
-
led, high wage
economy



“Exporting helps businesses:


Expand their customer base, potentially boosting sales,
productivity and profits


Achieve the scale needed to attract investment and reach their
full potential


Pick up new skills and expertise, and stay ahead of market
trends


Become internationally competitive, helping to protect their
domestic business from imported competitors


Create a long
-
term plan for their future.”

www.exportyear.govt.nz

Theory

Figure 2
-

Greenaway & Kneller (2007)

Implications of model


Wide variety of firm performance (assumed)


Self
-
selection into exporting


Persistence in exporting


Exporters achieve greater scale


Resource reallocation towards exporters raises
aggregate productivity


Explains relationship between trade & growth


Other effects on firms from exporting?


EG, higher productivity growth through learning
-
from
-
exporting


not assumed in model


Empirical literature strong on self
-
selection hypothesis,
mixed (weak) evidence on learning

Focus of export policy


Reduce threshold for entry into exporting


Cover sunk costs (eg, NZTE Market Development
Grants, 541 recipients, $36.3m)


Reduce trade barriers (eg, MFAT Policy Advice &
Representation: International + Other Countries
$220.2m)


Help firms raise productivity => self
-
select into exporting


Eg, NZTE Capability Building Grants (366
recipients, $3.2m)


R&D tax credit ($158m)


Many economies do these things


which
of them work?

How NZ research helps


Ex
-
ante


How does the economy work?


Is there a problem that policy could solve?


Ex
-
post


Did this policy work?


How could it be improved?


This work in the nature of the former
approach, but evaluations are underway!


First, to be useful, researchers need data…

The Longitudinal Business Database


Longitudinal Business Frame (LBF)


GST/Business Activity Indicator (BAI)


Financial accounts (IR10)


Company tax returns (IR4)


Linked Employer
-
Employee Dataset
(LEED) aggregates


Customs merchandise trade


Government programme lists


Sample surveys (AES, BOS, Innovation,
R&D, BPS, BFS)

Benefits of the LBD


Coverage


Includes roughly all “economically significant”
firms in NZ (~700K private
-
for
-
profit firms)


Panel dimension


7yrs (2000
-
6), ~450K active firms in any year, ~50K
entrants/exits


More performance metrics


Exporting by good
-
destination; profitability;
productivity


Huge potential for firm
-
level research


Some industry restrictions in work
presented today

Papers this presentation draws on


Fabling & Grimes (2007a) “Do exporters cut the hedge?
Who hedges, when & why”, NZAE’07


Fabling & Grimes (2007b) “Over the hedge or under it?
Exporters’ Optimal and Selective Hedging Choices”,
NZESG presentation/paper in prep.


Fabling et al. (2007) “Some rise by sin, & some by virtue
fall: Firm dynamics, market structure & performance”,
NZAE’07


Fabling & Sanderson (2007) “Peter Piper picked a peck of
pickled peppers & packed them off to Portugal: Firm
-
level
patterns in merchandise trade”, NZAE’07


Greenaway & Kneller (2007) “Firm heterogeneity, exporting
and foreign direct investment”, Econ J, v117, pp134
-
161


International Study Group on Exports & Productivity (2007)
“Exports & productivity: Comparable evidence for 14
countries”, in prep.

Manufacturing value
-
added (2005)

0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
0.60
0.65
0.70
0.75
0.80
6.5
7.5
8.5
9.5
10.5
11.5
12.5
13.5
14.5
15.5
Log value-added
Density/proportion
All manufacturers
Exporters
Proportion of manufacturers exporting
Where does expansion come from?

Manufacturing labour productivity (2005)

0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
0.60
6.5
7.5
8.5
9.5
10.5
11.5
12.5
Log labour productivity
Density/proportion
All manufacturers
Exporters
Proportion of manufacturers exporting
Cross
-
country comparison


Proportion exporting (20+ employment)


14 country average 64%; NZ 56/65%


Sales per employee level differences (controlling
for firm effects, industry, size, average wage)


14 country average 7%; NZ 1.4/2.8%


Longitudinal results point towards self
-
selection


Hard to identify effect of entry on growth, though
often a small number of observations


Level difference less with proper measure of
value
-
added & control for capital inputs


7 country average 3.4%; NZ ?%


Manufacturing multifactor prod. (2005)

0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
0.60
4.5
5.5
6.5
7.5
8.5
9.5
10.5
Log multifactor productivity
Density/proportion
All manufacturers
Exporters
Proportion of manufacturers exporting
Manufacturer LP by export & FDI status

0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
7.4
7.6
7.8
8.0
8.2
8.4
8.6
8.8
9.0
9.2
9.4
9.6
9.8
10.0
10.2
10.4
10.6
10.8
11.0
11.2
11.4
11.6
11.8
12.0
12.2
12.4
12.6
Labour productivity
Density
Domestic-owned non-exporting manufacturing companies
Domestic-owned exporting manufacturing companies
Foreign-owned non-exporting manufacturing companies
Foreign-owned exporting manufacturing companies
It’s a tough world out there

Survival function for firm export spells

Currency risk a cause of attrition?

Destination - Australia (1st by value)
NZD
USD
AUD
OTH
Destination - US (2nd by value)
OTH
USD
AUD
NZD
Destination - Japan (3rd by value)
OTH
NZD
AUD
USD
Destination - China (4th by value)
USD
AUD
OTH
NZD
Destination - UK (5th by value)
NZD
OTH
USD
AUD
Theory


Optimal hedging (imperfect markets)


Eg, financial distress costs, underinvestment
costs, scale, managerial risk aversion/
governance, convex tax schedules


Selective hedging


Sensible if exporter has information comparative
advantage


Estimation


Exporters to Australia


Monthly Jun 2000
-
Mar 2006


Test both theories simultaneously


Two stage selection model


only observe hedging
behaviour for firms with foreign currency exports


Share of AUD exporters hedging

Number of AUD exporters by month
0
50
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
850
06/00
09/00
12/00
03/01
06/01
09/01
12/01
03/02
06/02
09/02
12/02
03/03
06/03
09/03
12/03
03/04
06/04
09/04
12/04
03/05
06/05
09/05
12/05
03/06
0.82
0.84
0.86
0.88
0.90
0.92
0.94
0.96
0.98
1.00
1.02
1.04
1.06
1.08
1.10
1.12
1.14
1.16
Number of AUD exporters that don't hedge
ie, N(H1=0)
Number of AUD exporters that hedge
ie, N(H1>0)
Deviation of AUD from 3yr moving average (RHS)
(ie, AUD3)
Preliminary results


Hedging experience, diversification, scale


+ Firm hedged previously, 1/(time since last hedge)


-

NZD exports/sales, (non
-
AUD fx exports)/sales


+ No. of markets exported to


+ No. of countries imported from


+ Member of multi
-
enterprise group


Financial distress; under
-
investment risk:


-

Quick ratio


+ Interest expenses/EBIT


+ Intangible assets/total assets


Ownership (
-

Foreign
-
owned or SOE)


Exchange rate (expected negative effect)


Future work
-

international


LBD has huge potential. Planned work…


Determinants of export entry & exit at both
the firm and the relationship level


Impacts on firm performance


Extension to other forms of international
engagement (eg, foreign ownership)


Identification of service exporters


BOS’07


currently in the field (April 08)


Trade & local labour market characteristics


Evaluation (first study next week)


Other differences in export business
practices (BOS)