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The role of services for manufacturing firm exports

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  • Magnus Lodefalk

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Abstract

Manufacturing firms have been increasingly focusing on services, a trend that is evident in their composition of bought-in input and in-house production. The services intensity of firms may affect their productivity and thereby their competitiveness abroad; services are also instrumental in connecting firms to foreign markets and can help them to differentiate their offerings from those of other firms. However, the relation between services and manufacturing exports has only been partially analysed in the previous literature. This study contributes to the field by discussing the role of services for firms and empirically testing a set of related conjectures. Export intensity is regressed on two services input parameters, applying a fractional model to a rich panel of firms in Sweden in the period 2001–2007. The microeconometric results suggest that, after controlling for covariates and heterogeneity, service inputs affect a firms’ export capabilities: raising the proportion of services in in-house production yields higher export intensity on average. Furthermore, buying-in more services is associated with higher export intensity for firms in some industries. Overall, the study provides new firm-level evidence of the role of services as inputs in manufacturing. Copyright Kiel Institute 2014

Suggested Citation

  • Magnus Lodefalk, 2014. "The role of services for manufacturing firm exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(1), pages 59-82, February.
  • Handle: RePEc:spr:weltar:v:150:y:2014:i:1:p:59-82
    DOI: 10.1007/s10290-013-0171-4
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    Citations

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    Cited by:

    1. Wenxi Lu, 2018. "FDI, Service imports and Export development," School of Economics Working Papers 2018-05, University of Adelaide, School of Economics.
    2. Lodefalk, Magnus, 2017. "Servicification of Firms and Trade Policy Implications," World Trade Review, Cambridge University Press, vol. 16(1), pages 59-83, January.
    3. Jung, Benjamin & Felbermayr, Gabriel & Gröschl, Jasmin, 2018. "Quantifying Welfare Gains of Increased Trade Integration," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181606, Verein für Socialpolitik / German Economic Association.
    4. Lodefalk, Magnus & Kyvik Nordås, Hildegunn, 2017. "Trading firms and trading costs in services: The case of Sweden," Working Papers 2017:4, Örebro University, School of Business.
    5. Aleksandra Kordalska & Magdalena Olczyk, 2018. "CEE Trade in Services: Value-Added Versus Gross Terms Approaches," Eastern European Economics, Taylor & Francis Journals, vol. 56(4), pages 269-291, July.
    6. Oddone, Nahuel & Padilla, Ramón, 2014. "Upgrading value chains through professional and supporting services: Lessons from three agro-industry chains in El Salvador and Guatemala," Sede Subregional de la CEPAL en México (Estudios e Investigaciones) 36898, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2015. "The Role of Foreign Networks for Firm Export of Services," Working Papers 2015:6, Örebro University, School of Business.
    8. Peter Daniels & Pengfei Ni, 2014. "Urbanisation and changes in the sectoral structure of economic development: the scale of the manufacturing sector in Chinese cities and the shift towards service industry," Working Papers hal-00943972, HAL.
    9. Sonia Mukherjee, "undated". "The Role of Services in Enhancing Indian Manufacturing Exports: A Firm Level Analysis, 2000-01 to 2011-12," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 15-08, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    10. Cernat, Lucian & Kutlina-Dimitrova, Zornitsa, 2014. "Thinking in a box: A ‘mode 5’ approach to service trade," DG TRADE Chief Economist Notes 2014-1, Directorate General for Trade, European Commission.
    11. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2017. "Migration and Servicification: Do Immigrant Employees Spur Firm Exports of Services?," Ratio Working Papers 298, The Ratio Institute.
    12. Antimiani, Alessandro & Cernat, Lucian, 2017. "Liberalizing global trade in Mode 5 services: How much is it worth?," DG TRADE Chief Economist Notes 2017-4, Directorate General for Trade, European Commission.
    13. repec:bla:worlde:v:40:y:2017:i:3:p:499-516 is not listed on IDEAS
    14. repec:cuf:journl:y:2017:v:18:i:2:liu is not listed on IDEAS
    15. Nikolaj Malchow-Møller & Jakob Munch & Jan Skaksen, 2015. "Services trade, goods trade and productivity growth: evidence from a population of private sector firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(2), pages 197-229, May.
    16. Magnus Lodefalk, 2016. "Temporary expats for exports: micro-level evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(4), pages 733-772, November.
    17. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2016. "The Brexit Trade Disruption Revisited," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 17(1), pages 1-18.
    18. Felbermayr, Gabriel & Gröschl, Jasmin & Jung, Benjamin, 2017. "Wohlfahrtseffekte der Handelsliberalisierung: Studie im Auftrag des Sachverständigenrates zur Begutachtung der gesamtwirtschaftlichen Entwicklung. Endbericht vom 22. September 2017," Working Papers 03/2017, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    19. Bernard Hoekman & Ben Shepherd, 2017. "Services Productivity, Trade Policy and Manufacturing Exports," The World Economy, Wiley Blackwell, vol. 40(3), pages 499-516, March.
    20. repec:spr:jknowl:v:9:y:2018:i:4:d:10.1007_s13132-016-0397-1 is not listed on IDEAS
    21. Patricia Walter, 2017. "Anatomy of Austria’s trade in services," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 33-52.
    22. Aquilante, Tommaso & Vendrell-Herrero, Ferran, 2019. "Bundling and exporting: evidence from German SMEs," Bank of England working papers 781, Bank of England.
    23. repec:gam:jsusta:v:10:y:2018:i:5:p:1524-:d:145730 is not listed on IDEAS

    More about this item

    Keywords

    Firm; Export intensity; Manufacturing; Services; Intangibles; Innovation; F14; L24; L25; L60; 033;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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