Post on 06-Feb-2015
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Motivation: Extreme Lumpiness in Exporter Data
No. of firmsMedianSS/MedianNSS
AverageSS/AverageNSS
SS Share
SS Man. Share
Average top 1% 55 1459 164 53 54Median top 1% 28 1195 108 53 52Average 1 32458 586 14 17Median 1 8298 258 11 12Average 10 7011 283 39 42Median 10 2171 138 36 41
Exporter Concentration Increasing in Stage of Development
ALB
BELBFA
BGD
BGRBRA
BWA
CHL
CMR
COLCRI
DOM
ECU
EGY
ESP
ESTGTM
IRNJOR
KEN
KHM
LAO
LBNMAR
MEX
MKDMLI MUSMWI
NERNIC
NORNZL
PAK
PER
SEN
SLV
SWE
TZA
UGA
YEM
ZAF
.2.4
.6.8
1S
hare
Top
1%
6 7 8 9 10 11Ln GDPpc
Share of Top 1% of Exporters - lnGDPpc
Motivation Continued• Important Implications
– Individual firms matter, as in Gabaix (2011), shocks to individual firms can have aggregate effects, export growth and diversification
– Individual firms affect type of exports (effectively, comparative advantage)
• Firms affect technology and RCA can be dependent on a handful of firms.
– Greater role for oligopoly and FDI—not a draw, but firms bring productivity from abroad (Neary 2009).
– Fixed versus variable costs and welfare- Entry costs matter much less that variable costs since infra-marginal firms are small (di Giovanni and Levchenko 2010)
• Where do big firms come from?– If big firms drive exports, where do they come from?
Export Superstars
• Large exporters (Superstars) define exports (Freund and Pierola, 2012).– Superstars drive export growth and diversification. – Superstars drive sectoral export patterns and
comparative advantage in some industries.– Superstars are born relatively large and grow fast
• MENA’s export performance has been very weak. What is the role of MENA’s superstars in explaining it?
Export Superstars
• Large exporters (Superstars) define exports (Freund and Pierola, 2012).– Superstars drive export growth and diversification. – Superstars drive sectoral export patterns and comparative
advantage in some industries.– Superstars are born relatively large and grow fast
• MENA’s export performance has been very weak. What is the role of MENA’s superstars in explaining it?– Punchline: Mena’s elite export team is in need of a deeper
and more dynamic bench.
I. Data and Superstars Characteristics
Data used for this paper: Exporter-level information on non-oil exports for 32 countries for period 2004-2010
Exports are Defined by a Few Big Firms
All countries MENA (blue) vs. Non-MENA (red)
01
23
45
16 17 18 19 20 21Ln(size exporter 2008)
01
23
45
lnr
16 17 18 19 20 21Ln(size exporter)
In MENA, top firm is relatively larger given the distribution of the other firms.
Relationship is linear. Distribution follows Zipf’s law.
Ln (average size 2008) Ln (average size 2008)
Ln (rank)Ln (rank)
MENA’s Elite Compared
Number of Superstars
Ratio MedianSS/MedianNSS
Ratio Top Exporter/MedianNSS
Ratio Median Top 10/MedianNSS
(1) (2) (5) (8)52 572 9,540 2,055 28 1,195 8,298 2,171
SS = Top 1% of Exporters SS = Top Exporter SS = Top 10 Exporters
All MedianMENA Median
Region
MENA vs. All countries: Top exporter is relatively bigger in MENA.
If taken as a group (top 1% of firms), MENA’s superstars are relatively smaller.
II. Superstars’ role in export growth and diversification in MENA
Growth Accounting
• Superstars contribution to overall growth• Superstars contribution to diversification
– Last 3-consecutive-year period available for each country
– Intensive margin: all export flows at the country-HS 6 digit that existed in both Year 1 and Year 3
– Extensive margin: export flows at the country – HS 6 digit that disappear or appear in Year 3 (with respect to Year 1)
Superstars: Export Growth and Diversification
Int NSS (1) Int SS (2) Ext NSS (3) Ext SS (4) Total NSS (5) Total SS (6) Total Growth (7)
Median MENA 0.22 0.66 0.02 0.10 0.24 0.76 40.96%Median SSA 0.28 0.50 0.13 0.17 0.36 0.64 46.39%Median LAC 0.34 0.60 0.04 0.02 0.39 0.61 27.69%Median ROW 0.62 0.32 0.05 0.04 0.66 0.34 29.76%Median ALL 0.37 0.48 0.06 0.07 0.44 0.56 34.46%
Median MENA 0.37 0.29 0.10 0.04 0.69 0.31 40.96%Median SSA 0.75 0.04 0.22 0.00 0.91 0.09 46.39%Median LAC 0.85 0.03 0.04 (0.00) 0.97 0.03 27.69%Median ROW 0.86 0.01 0.09 0.01 0.96 0.04 29.76%Median ALL 0.82 0.05 0.10 0.01 0.92 0.08 34.46%
Median MENA 0.30 0.58 0.03 0.13 0.33 0.67 40.96%Median SSA 0.51 0.34 0.15 0.16 0.64 0.36 46.39%Median LAC 0.60 0.37 0.04 (0.00) 0.64 0.36 27.69%Median ROW 0.76 0.23 0.07 0.02 0.77 0.23 29.76%Median ALL 0.55 0.31 0.07 0.04 0.65 0.35 34.46%
Top Firm
Top 10
Share in Total Growth
Top 1%
0.44 0.56
Superstars contribute to more than half overall growth across countries
0.69 0.31
Top firm is particularly notable in MENA
0.37 0.48 0.06 0.07
They also explain more than half of growth in both margins of trade.
0.92 0.08
0.10 0.04
0.10 0.01
III. Superstars and Sectoral Export Patterns
Variation in Sectoral Export Pattern from Superstars
Top 1% Top1 Top100
10
20
30
40
50
60
70
80
MENA OTHERS
Superstars Contribution to Comparative Advantage
Apparel
Chemica
ls
Elecri
cal m
achinery
Food an
d kindred
products
Stone,
clay a
nd glass
Machinery
Metals
Mineral p
roducts
Miscell
aneo
us goods
Paper
Plastic a
nd Rubber
Precious M
etals
Texti
les
Transp
ort
Wood
00.040.080.120.16
0.2
Comparative Advantage Sectors
MENA OTHERS
Apparel
Chemica
ls
Elecri
cal m
achinery
Food an
d kindred
products
Stone,
clay a
nd glass
Machinery
Metals
Mineral p
roducts
Miscell
aneo
us goods
Paper
Plastic a
nd Rubber
Precious M
etals
Texti
les
Transp
ort
Wood
00.20.40.60.8
11.2
Superstars Driven Comparative Advantage
MENA OTHERS
IV. Superstars’ Dynamics
Superstars were already big a decade ago, or they are new firms
Over 50 percent of 2010’s Moroccan superstars were already so in 2002.
Sense of less dynamism among top firms in Morocco.
Strong staying power of exporters in Morocco
There is little transition of firms to other parts of the firm size distribution
Numbers in diagonal for Morocco are in all cases higher than corresponding numbers for Costa Rica and Peru
Firm size distrib. in 2002
Firm size distribution in
One Firm Can Change Comparative Advantage
Costa Rica Morocco
Electrical Machinery Misc. Paper
Electrical Machinery
Reversal year 2005 2006 2008 2005Revealed Comparative AdvantageRCA start 0.45 0.44 0.55 0.81RCA at Reversal 1.27 1.08 1.13 1.01RCA end 1.24 1.04 1.13 1.09Revealed Comparative Advantage, excluding the top firmRCA start 0.45 0.32 0.32 0.39RCA at Reversal 0.63 0.67 0.49 0.66RCA end 0.49 0.75 0.49 0.88Top Firm Export share at start 0.01 0.29 0.43 0.55Export share at reversal 0.56 0.41 0.57 0.39Export share end 0.65 0.30 0.57 0.22
Conclusions• Importance of top similar in MENA to the rest of the world.
– Single largest firm in MENA tends to be relatively large as compared with countries in other regions. The other top firms are not as outstanding.
– MENA superstars contribute more to growth and diversification, especially top firm.
– MENA superstars contribute less to creating new comparative advantage sectors.
– Some evidence of less churning among MENA’s superstars.• Consistent with evidence from private sector studies• Relatively old managers• Relatively old firms
=> Weak lifecycle dynamics in MENA, not enough exporters able to grow into large global exporters and break new industries.
Policy Implications
• Variable rewards/costs matter more than fixed costs– Exchange rate is critical—overvaluation has huge
costs.– Trade costs, tariffs and customs are important– Business climate must not impede firm growth– Trade agreements
• SME financing is not a viable tool for export growth