Preparing to export
Danielken Molina, Marc Muendler, 27 May 2013
Exporting is essential for economic development. But can firms move from local sales to export sales? How do firms prepare for exporting? This column presents new research showing that worker mobility is an important mechanism by which exporter knowledge spreads through the economy.
Exporting is an essential feature of strategies for economic development for very good reasons. A large body of empirical evidence shows that exporters are larger, more productive, pay higher wages and hire more skilled workers (Bernard and Jensen 1995). But do firms move from local sales to export sales? What choices do firms make in preparation for exporting?
Tags: exports, firms, Labour Markets
Stock market turnover and corporate governance
Alex Edmans, Vivian W Fang, Emanuel Zur, 16 February 2013
The stock market is a powerful tool for controlling corporations’ behaviour. But which is better, a highly liquid market or a number of large blockholders? This column argues in favour of liquidity. Evidence suggests that policymakers should not reduce stock liquidity through greater regulation. While the idea that liquidity encourages short-term trading – rather than long-term governance – sounds intuitive, deeper analysis shows that liquidity is beneficial because it encourages large shareholders to form in the first place, and allows shareholders to punish underperforming firms through selling their stake.
The stock market is a powerful tool for controlling corporation’s behaviour. But what is best:
Topics: Financial markets
Tags: corporate governance, financial markets, firms, liquidity, stocks
Are services traded differently?
Andrea Ariu, 23 December 2012
International trade is traditionally thought of as goods crossing borders. Trade in services, however, is becoming increasingly important for high-income countries. This column, using Belgian firm-level data from 1995-2005, argues that trade in goods and services differ deeply in key aspects such as firm participation rates, size and frequency of shipments, entry and exit rates in foreign markets and in growth strategies.
International trade is traditionally thought of as goods crossing borders. Trade in services, however, is becoming increasingly important for high-income countries and its role is likely to grow substantially over the next years (Francois and Hoekman 2010).
Trade in services and goods differ along several critical dimensions (WTO 2010).
Topics: International trade
Tags: Belgium, firms, trade in services
Firm organisation: What we know and why we should care
Laura Alfaro, Paola Conconi, Harald Fadinger, Patrick Legros, Andrew Newman, 2 December 2012
Increasingly, people are pointing the finger of blame for economic woe at large firms. This column argues that organisation design is often affected by government trade policy. If firm organisation design has implications for consumer welfare (in terms of prices and quality of product), evidence suggests that governments should make sure that in future, trade policy and corporate governance policy are more complementary.
A series of corporate calamities in the 2000s has helped to arouse suspicion amongst policymakers and the public that corporate organisation matters. Internal organisation issues are blamed for lost jobs, lost pensions and lost fortunes (e.g.
Topics: Industrial organisation, International trade
Tags: firm organisation, firms, protectionism, trade
The (re)location effects of enterprise zones
Thierry Mayer, Florian Mayneris, Loriane Py, 28 September 2012
Since the 1980s governments in the US, UK and France have been implementing ‘enterprise zones’ to tackle inequalities within cities. This column examines the latest French experiment in the 2000s. It suggests that the zones were largely successful in attracting small firms, but that this was mostly due to opportunistic relocation within municipalities.
Spatial inequalities within French municipalities are striking. Some depressed urban areas with low income, high unemployment rate, low level of education and deprived social housing are just a few blocks away from wealthy neighbourhoods. These urban disparities have important social and economic implications.
Topics: Industrial organisation
Tags: Enterprise zones, firms, France
Firms reorganise to grow (by hiring workers that know and earn less)
Lorenzo Caliendo, Ferdinando Monte, Esteban Rossi-Hansberg , 31 August 2012
Firms that reorganise production to grow account for almost 40% of the value added created in the manufacturing sector. They add layers of management, increase by 7% the average hours worked in the firm, and reduce the average wage at pre-existing layers of managers or workers by 11%. This column presents new stylised facts about the way firms organise production and explains how recent advances in economic theory can help to understand these findings.
How do firms organise production? How does this organisation change as firms grow?
Topics: Labour markets, Productivity and Innovation
Tags: firms, growth, production
What determines productivity?
Chad Syverson, 25 June 2010
This column summarises a wealth of literature that tries to understand what determines productivity, which is often referred to as a measure of our ignorance. It concludes with a call for more data – including currently unmeasured aspects of business’s production practices such as producer-level prices. While collecting more data is costly, this column argues that there is much to be gained in exchange.
Productivity – the efficiency with which firms transform inputs into outputs – is the elixir of economic success. Nations that enjoy rising productivity experience sustainable growth that simplifies a broad swath of economic and social problems. The same is true at the corporate level. Naturally then, productivity is the focus of a great deal of government and corporate policy.
Topics: Productivity and Innovation
Tags: firms, Management, productivity
The transformation of India: Incumbent control, reforms, and newcomers
Laura Alfaro, Anusha Chari, 12 December 2009
What microeconomic forces drove the structural transformation of India’s economy in recent decades? This column studies firm-level data and portrays a dynamic economy driven by the growth of private and foreign firms. But the Indian economy did not go through an industrial shakeout phase driven by creative destruction. The endurance of incumbent firms prevented a dramatic microeconomic transformation.
The end of the license Raj and implementation of pro-market reforms in the 1980s and 1990s had far-reaching implications for India’s industrial structure. Significant sectors of the economy were opened up to private participation through industrial de-licensing and de-reservation measures.
Tags: firms, India, liberalisation
The competitiveness of European firms and the euro
Gianmarco I.P. Ottaviano, Filippo di Mauro, Daria Taglioni, 10 March 2009
This column analyses the impact of the euro’s adoption upon European firm’s productivity and international competitiveness. The euro produced significant competitiveness gains for relatively small economies such as Finland, Belgium, and Austria. If Denmark and Sweden had joined the euro area in recent years, they would have enjoyed gains equivalent to a 5% across-the-board reduction in trade frictions.
In recent years, much attention has been devoted to the impact of a single currency on trade volumes.
Topics: Europe's nations and regions, International trade, Productivity and Innovation
Tags: competitiveness, euro, firms