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Productivity and Trade Orientation in UK Manufacturing

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  • Marian Rizov
  • Patrick Paul Walsh

Abstract

We show that improvements in aggregate productivity in UK manufacturing during the first years after the implementation of the Euro, by the UK's main trading partners in Europe, are determined by both market share reallocation and within-company productivity growth. Furthermore, we outline a structural methodology for estimating parameters of a production function linking the unobservable productivity to endogenous company-level trade orientation, investment and exit decisions. This allows us to back out consistent and unbiased estimates of productivity dynamics by trade orientation of companies within four-digit UK manufacturing industries using FAME data over the period 1994-2001. Our estimates of productivity dynamics indicate that improvements in aggregate productivity were mainly driven by market share reallocations away from inefficient and towards efficient exporting companies alongside productivity improvements within non-exporting companies. Copyright (c) Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2009.

Suggested Citation

  • Marian Rizov & Patrick Paul Walsh, 2009. "Productivity and Trade Orientation in UK Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(6), pages 821-849, December.
  • Handle: RePEc:bla:obuest:v:71:y:2009:i:6:p:821-849
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Marian Rizov & Patrick Paul Walsh, 2011. "Is There a Rural-Urban Divide? Location and Productivity of UK Manufacturing," Regional Studies, Taylor & Francis Journals, vol. 45(5), pages 641-656.
    2. Kazukauskas, Andrius & Newman, Carol F. & Thorne, Fiona S., 2010. "Analysing the Effect of Decoupling on Agricultural Production: Evidence from Irish Dairy Farms using the Olley and Pakes Approach," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 59(3).
    3. Marian Rizov & Jan Pokrivcak & Pavel Ciaian, 2013. "CAP Subsidies and Productivity of the EU Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(3), pages 537-557, September.
    4. Smeets, Valérie & Warzynski, Frédéric, 2010. "Learning by Exporting, Importing or Both? Estimating productivity with multi-product firms, pricing heterogeneity and the role of international trade," Working Papers 10-13, University of Aarhus, Aarhus School of Business, Department of Economics.
    5. Rizov, Marian & Pokrivcak, Jan & Ciaian, Pavel, 2013. "CAP Subsidies and the Productivity of EU Farms," Factor Markets Working Papers 148, Centre for European Policy Studies.
    6. Rizov, Marian & Oskam, Arie & Walsh, Paul, 2012. "Is there a limit to agglomeration? Evidence from productivity of Dutch firms," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 595-606.
    7. María D. Parra & Inmaculada Martínez-Zarzoso, 2014. "Imported intermediate inputs and Egyptian exports: Exploring the links," Working Papers 2014/09, Economics Department, Universitat Jaume I, Castellón (Spain).

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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