To The Threshold And Beyond: Size, Productivity And (Scale) Barriers To Export

DMaking use of a firm-level dataset for the universe of Italian exporting firms collected by ISTAT, we identify the minimum combinations of size and productivity that Italian manufacturing firms need to achieve (in their own industry) in order to access international markets. These “export thresholds” are estimated by applying for the first time in economics the ROC (Receiver Operating Characteristics) methodology, so far widely used in other disciplines (e.g. medicine, machine learning, natural sciences). The results of the analysis allow us to provide, for each industry: (1) a mapping of the upper and lower-side of the distribution of firms with respect to the export threshold, stressing the size-productivity combination choices of exporting and non-exporting units; (2) the relative weight of productivity and size in determining the export threshold in a given industry; 3) the best lever of policy to be used in order to increase firms’ intensive margin (the share of exported turnover) as well as the extensive margin for the Italian economy (the share of exporting firms). The methodology proposed in this paper can also open the field to further important developments. In particular, our empirical model could be augmented to point out other determinants of the thresholds than size and productivity, especially those related to the industry structure or regulation. Such “exogenous” dimensions of the export thresholds would help better detect effective policy interventions to reduce barriers to trade