Macro and microeconomic determinants of the EU firms’ export-market participation

Rapidly expanding literature on the new strand in the new trade theory and empirical research in this area indicate factors which can positively influence export participation of firms. The analysis presented in this study concentrates on verifying which barriers met by the European firms are significant constraints to their exports with an aim of ascertaining if problems identified at the microeconomic level may have their roots in macroeconomic situation. Estimation results indicate that the probability of exporting depends on a combination of a wide set of firms’ characteristics. Country-level macroeconomic and institutional conditions are responsible for a considerable part of country specific determinants of firms’ export and significantly influence participation in the international trade. The level of economic development, economic freedom and financial market regulations are important determinants of export decisions. The constraints perceived by the European entrepreneurs have rather limited direct impact on a probability of being exporter, however they influence negatively firms’ main competitiveness factor − TFP. Moreover, the analysis suggests that government policy going beyond creating friendly business environment and supporting the development of financial institutions is not effective. Any kind of public support, even directed to particular firms, does not increase their international competitiveness.