Tech on the ROC: A New Way of Looking at Exporting Firms

Policies aimed at increasing firm participation in international markets have been playing an increasing role. Using a new approach to estimate export threshold for manufacturing firms, and considering the technology adoption, this paper analyses the potential mismatch between the conditions required for a firm to become exporter and the pattern of technology in the industry. The export threshold – which is estimated on the basis of the ROC methodology – is the minimum combination of productivity and “economic size” (a broad measure of firm size composed of employment, age, turnover and capital intensity) that firms need to achieve in order to access international markets. In turn, the technology prevailing in each industry is expressed in terms of the relative weights of productivity and size corresponding to a (firm-level) technology level higher than the average within the industry. The interaction between this “technology line” and the export threshold allows for deriving a new firm-based taxonomy that can be useful to study exporting and non-exporting firms in the light of their position with respect to the technology prevailing in the given industry, allowing to have a more efficient selection of policy targets (e.g. intensive or extensive margins).