The Performance of Trading Firms in the Services Sectors – Comparable Evidence from Four EU Countries

41 Pages Posted: 19 Jan 2016

See all articles by Jože P. Damijan

Jože P. Damijan

University of Ljubljana, Slovenia - Department of International Economics

Stefanie Haller

University College Dublin (UCD)

Ville Kaitila

ETLA, Research Institute of the Finnish Economy

Črt Kostevc

University of Ljubljana - Faculty of Economics

Mika Maliranta

ETLA, The Research Institute of the Finnish Economy

Emmanuel Milet

Paris School of Economics (PSE)(Paris1)

Daniel Mirza

Banque de France

Matija Rojec

University of Ljubljana - Faculty of Social Sciences

Date Written: December 2015

Abstract

We examine trade complexity and the implications of adding additional dimensions of trade for firm performance among services producers. We use unique firm‐level data to compare these patterns across four EU countries. Overall, services firms are relatively less engaged in trade than manufacturing firms; they mostly trade goods and are more likely to import than to export. Trade in services is quite rare; services are more likely to be traded by firms already trading goods. Trading firms in the services sectors are significantly larger, more productive and pay higher wages than non‐traders. Two‐way traders outperform one‐way traders. Changes in trading status by either adding another dimension of trade (imports, exports) or another type of product (goods, services) are infrequent and are associated with significant preswitching premia. In contrast, learning effects from switching trading status are uncommon. This points to significant fixed cost of being engaged in trade and confirms some previous findings that trading services firms have similar traits as their manufacturing counterparts. Apart from greater trade participation in smaller countries, we do not observe systematic differences in terms of trade or switching premia between the four countries that might be attributable to differences in country characteristics.

Suggested Citation

Damijan, Joze P. and Haller, Stefanie and Kaitila, Ville and Kostevc, Crt and Maliranta, Mika and Milet, Emmanuel and Mirza, Daniel and Rojec, Matija, The Performance of Trading Firms in the Services Sectors – Comparable Evidence from Four EU Countries (December 2015). The World Economy, Vol. 38, Issue 12, pp. 1809-1849, 2015. Available at SSRN: https://ssrn.com/abstract=2717224 or http://dx.doi.org/10.1111/twec.12291

Joze P. Damijan (Contact Author)

University of Ljubljana, Slovenia - Department of International Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia
+386 61 189 24 00 (Phone)
+386 61 189 26 98 (Fax)

Stefanie Haller

University College Dublin (UCD) ( email )

Belfield, Dublin 4 4
Ireland

Ville Kaitila

ETLA, Research Institute of the Finnish Economy ( email )

Lonnrotink. 4 B
FIN-00120 Helsinki
Finland

Crt Kostevc

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Mika Maliranta

ETLA, The Research Institute of the Finnish Economy ( email )

Lonnrotink. 4 B
FIN-00120 Helsinki, 00120
Finland
+358 9 609900 (Phone)
+358 9 601753 (Fax)

Emmanuel Milet

Paris School of Economics (PSE)(Paris1) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Daniel Mirza

Banque de France ( email )

Paris
France

Matija Rojec

University of Ljubljana - Faculty of Social Sciences ( email )

Kardeljeva ploscad 5
Ljubljana, 1000
Slovenia

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