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Exports, Foreign Direct Investments and Productivity: Are Services Firms Different?

  • Wagner, Joachim

    ()

    (Leuphana University Lüneburg)

This paper contributes to the literature on international firm activities and firm performance by providing the first evidence on the link of productivity and both exports and foreign direct investment (fdi) in services firms from a highly developed country. It uses unique new data from Germany - one of the leading actors on the world market for services - that merge information from regular surveys and from a one-time special purpose survey performed by the Statistical Offices. Descriptive statistics, parametric and non-parametric statistical tests and regression analyses (with and without explicitly taking differences along the conditional productivity distribution and firms with extreme values, or outliers, into account) indicate that the productivity pecking order found in numerous studies using data for firms from manufacturing industries – where the firms with the highest productivity engage in fdi while the least productive firms serve the home market only and the productivity of exporting firms is in between – does not exist among firms from services industries. In line with the theoretical model and the empirical results for software firms from India provided by Bhattacharya, Patnaik and Shah (2010) there is evidence that firms with fdi are less productive than firms that export.

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File URL: http://ftp.iza.org/dp6009.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6009.

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Length: 31 pages
Date of creation: Oct 2011
Date of revision:
Publication status: published in: Service Industries Journal, 2014, 34 (1), 24-37
Handle: RePEc:iza:izadps:dp6009
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  1. Roberto Álvarez & Martin Andersson & Flora Bellone & Loren Brandt & Davide Castellani & Joze P. Damijan & Jose C. Fariñas & Ana M. Fernandes & Helmut Fryges & Holger Görg & David Greenaway & Stefanie , 2007. "Exports and Productivity: Comparable Evidence for 14 Countries," CIE Discussion Papers 2007-11, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
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  4. Chad Syverson, 2010. "What Determines Productivity?," NBER Working Papers 15712, National Bureau of Economic Research, Inc.
  5. Alexander Vogel & Joachim Wagner, 2011. "Robust estimates of exporter productivity premia in German business services enterprises," Working Paper Series in Economics 207, University of Lüneburg, Institute of Economics.
  6. Alexander Vogel, 2009. "The German Business Services Statistics Panel 2003 to 2007," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 129(3), pages 515-522.
  7. Rudrani Bhattacharya & Ila Patnaik & Ajay Shah, 2012. "Export Versus FDI in Services," The World Economy, Wiley Blackwell, vol. 35(1), pages 61-78, 01.
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  12. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
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  14. Buchinsky, Moshe, 1994. "Changes in the U.S. Wage Structure 1963-1987: Application of Quantile Regression," Econometrica, Econometric Society, vol. 62(2), pages 405-58, March.
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  16. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
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