Firm Heterogeneity and Exports in the Netherlands: Identifying Export Potential

44 Pages Posted: 21 Jul 2017

See all articles by Steven Brakman

Steven Brakman

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Harry Garretsen

University of Groningen

Raoul van Maarseveen

CPB Netherlands Bureau of Economic Policy Analysis

Peter Zwaneveld

CPB Netherlands Bureau of Economic Policy Analysis

Date Written: July 04, 2017

Abstract

Stimulating firms to become exporters is of interest to policy makers, as exporters are in general more productive than non-exporters. However, selecting high export potentials is difficult in practice. The contribution of this paper is to characterize and identify these (high) export potentials. According to the Melitz (2003) model, potential exporters have to be productive enough to overcome the entry costs of foreign markets. Once firms pass this productivity threshold, they all export. Empirical evidence, however, indicates that a substantial share of high-productive firms does not export. In this paper, we focus specifically on this group of high-productive non-exporters. We employ a large micro-dataset for Dutch firms both in services and manufacturing for 2010-2014. Our findings are threefold. First, high productivity is an important, but not a sufficient condition for exporting. Firm size (substitute for productivity), import status, and foreign ownership are also important. Second, firm location is crucial. A location in peripheral areas prevents high productive firms from exporting; especially a location in the Northern part of the Netherlands reduces the probability to export. Third, the manufacturing sector differs from the services sector. Given that the median exporter in our sample is a services firm; this sector should be included in export research.

Keywords: firm heterogeneity, export behavior, location

JEL Classification: F120, F140

Suggested Citation

Brakman, Steven and Garretsen, Harry and van Maarseveen, Raoul and Zwaneveld, Peter, Firm Heterogeneity and Exports in the Netherlands: Identifying Export Potential (July 04, 2017). CESifo Working Paper Series No. 6544. Available at SSRN: https://ssrn.com/abstract=3005175

Steven Brakman (Contact Author)

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 3746 (Phone)
+31 50 363 3730 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Harry Garretsen

University of Groningen ( email )

Raoul Van Maarseveen

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Peter Zwaneveld

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Register to save articles to
your library

Register

Paper statistics

Downloads
26
Abstract Views
139
PlumX Metrics