Archive:Statistics comparing enterprises which trade internationally with those who do not
Data extracted in September 2015. Planned article update: April 2018.
Authors: Anne Katrine Bach Jensen, Peter Bøegh Nielsen, Jesper Moltrup-Nielsen (Statistics Denmark), Pekka Alajääskö, Anton Roodhuijzen (Eurostat, Structural business statistics and global value chains)
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Economic globalisation and the participation of enterprises in international trade in goods are important drivers for economic growth. Evidence to demonstrate this is vital for designing policy. Research has shown that international traders differ substantially from domestic enterprises [1].
This article uses results from eight European countries (Austria, Denmark, Finland, Germany, Latvia, Norway, Portugal and Sweden) that participated in a microdata linking (MDL) project. Each participating country constructed a national database with tailor-made, harmonised contents. This enables data analysis at enterprise level, comparing international traders and domestic enterprises. It also enables analysis of differences according to type of trading and/or control. The national databases cover reference years 2008 and 2012 enabling the analysis of developments since the economic crisis started.
The analysis splits the population into those taking part in international trade in goods — being an exporter, importer or two-way trader — and those who are active on domestic markets only[2]. Most enterprises are two-way traders: very few enterprises export without importing and vice versa. Exporters (including two-way traders) are of special interest for policy makers because of their potential job creation due to demand from markets abroad. Importers (again including two way traders) are also important since they facilitate access to the raw materials, intermediate goods and technologies that are otherwise not easily available. Therefore the analysis includes both exporters and importers.
The Economic globalisation indicators in manufacturing, wholesale and retail trade article , showed that manufacturing typically has greater shares of exports while wholesale and retail trade has greater shares of imports. Therefore this article analyses manufacturing exporters and wholesale and retail trade importers.
The remainder of the article starts with a summary of the main findings. Then the article presents characteristics firstly of international traders, secondly of exporters and thirdly of importers. Finally the statistics are put in context and there are some notes and links to related information.
This article is part of an online publication on Microdata linking in business statistics.
Main statistical findings
- More than one in five (23 %) of all manufacturing enterprises in the eight participating countries are international traders. Denmark and Austria have the highest shares (around 40 %); Germany is a little above average (25 %) while other countries were below the average.
- These international traders are very important for employment; they account for 75 % of total manufacturing employment, ranging from just under 90 % (Austria and Denmark) to 68 % (Portugal and Norway).
- Accordingly, employment measured in full-time equivalents (FTE) per enterprise is on average much larger in international traders than in domestic enterprises. On average, the largest international traders are in Finland while the largest domestic enterprises are in Germany.
- The share of foreign-controlled international traders ranges from 4.6 % in Portugal to 21.2 % in Latvia. Sweden (17.0 %) and Finland (11.9 %) are the only other countries with shares of more than 10 %.
- In most countries, exporters lost fewer jobs since the start of the crisis than non-exporters; the exceptions were Finland, Norway and Sweden.
- In all countries except Finland and Norway, growth of value added per enterprise is higher for exporters than for non-exporters. In all countries except Finland and Portugal, exporters have regained and even surpassed the pre-crisis level for value added per enterprise. This is also the case for non-exporters in Austria, Norway and Sweden.
- Foreign-controlled exporters in manufacturing are very important for exports. In 2012, they accounted for more than half of total exports in Sweden and more than 40% in Latvia, Austria and Norway.
- In all participating countries, exports divided by employment (FTE) were higher in foreign-controlled than in domestically controlled exporters.
- Foreign-controlled wholesale and retail importers account for the highest shares of imports in most countries. In 2012, in Sweden, they accounted for 64 % of total imports of goods.
- In all countries, import intensity is higher in foreign-controlled than in domestically controlled importers.
Characteristics of international traders
In 2012, in the eight European countries taking part in this project, 93 817 of 413 781 manufacturing enterprises — or 23 % — can be characterised as international traders (importers, exporters or two-way traders). The share of international traders in manufacturing differs from country to country (see Table 1). The highest shares, around 40 %, were observed in Austria and Denmark. Between 2008 and 2012, the number of international traders dropped in five of the eight countries while the number of domestic enterprises fell in only four of the eight. For the eight countries as a whole the number of international traders grew by less than 0.5 % while the number of domestic enterprises grew by 3 %.
In 2012, international traders employed slightly more than 6.9 million employees (FTE) compared with fewer than 2.3 million in domestic enterprises. These international traders are very important for employment: they account for 75 % of total employment, ranging from nearly 90 % in Austria and Denmark to 68 % in Portugal and Norway (see Table 2).
Comparing tables 1 and 2 shows that the number of international traders is much smaller than the number of domestic enterprises, but that the reverse is true for employment. Consequently, international traders are much larger than domestic enterprises (see Figure 1). In 2012, in the eight countries considered, international traders had on average 76 employees (FTE) compared with 6.3 in the domestic enterprises. On average, the largest international traders are in Finland while the largest domestic enterprises are in Germany.
Not surprisingly, the majority of international traders in manufacturing are domestically controlled (see Figure 2); in most countries, domestically controlled enterprises constitute at least 90 % of all international enterprises. The exceptions are Latvia (78 %), Sweden (83 %) and Finland (88 %). This pattern has not been influenced by the economic crisis as the shares remained stable from 2008 to 2012.
Although in manufacturing domestically controlled international traders — as a group — have more employees than foreign-controlled, they have fewer employees per enterprise (see Figure 3). Moreover, from 2008 to 2012, there was a small drop in the number of employees (FTE) per enterprise in domestically controlled international traders in all countries. On average for all countries, foreign-controlled international traders in 2012 employed 168 employees (FTE) compared with only 50 for domestically controlled international traders.
For some countries, it is possible to further divide domestically controlled international traders into those with and those without foreign affiliates (see Figure 4). This shows that the highest shares of employment are in domestically controlled international traders without foreign affiliates. These results are consistent with the findings in published studies stating that the first and most common type of internationalisation is engagement in international trade — most employment is in domestically controlled enterprises without foreign affiliates, and a much higher share of domestically controlled international traders (not shown in the figure) do not have foreign affiliates. An exception to this is Denmark where employment shares of domestically controlled international traders — with and without foreign affiliates — are almost equal.
Characteristics of exporters
This section provides insights into the employment shares and economic performance of exporters compared with non-exporters by analysing their relative performance in terms of employment and value added creation. Furthermore, the section analyses exporters by type of control (foreign/domestically controlled) and type of trade (two-way traders/exporters only).
For all countries except Germany, employment in both exporting and non-exporting enterprises decreased from 2008 to 2012 (see Figure 5). For the majority of countries, non-exporters lost more employment than exporters. However, the reverse is true in Finland, Sweden and Norway.
In all countries except Finland and Norway, the growth of value added per enterprise is higher for exporters than for non-exporters (see Figure 6). Furthermore although only German exporters have regained their pre-crisis employment shares, exporters in six of the eight countries have regained and even surpassed the pre-crisis level for value added per enterprise. This is also the case for non-exporters in Austria, Norway and Sweden. Combining the information in Figures 5 and 6, leads to the conclusion that in most countries exporters have increased their productivity more than non-exporters.
In most countries, a relatively large share of exports are generated by foreign-controlled traders, but different development patterns can be identified (see Figure 7). In Denmark, Germany (since 2009), Norway and Sweden, domestically controlled exporters lost export share after the financial crisis, while in Finland they increased their share substantially. Latvia, Austria and Portugal also experienced small increases.
Interestingly, the great majority of exporters are also importers. These two-way traders account for at least 90 % of total exports in all countries except Denmark, Finland and Latvia (see Figure 8). This share was stable at around 90 % between 2008 and 2012 indicating that exports and imports of goods is to a large extent carried out by a group of enterprises being internationally oriented and involved in global value chains both as importers and exporters.
For some participating countries, it was possible to deepen the analysis and compare foreign-controlled exporters with domestically controlled exporters with and without foreign affiliates. The results show that — except for Latvia — the greater share of exports in 2012 was generated by multinational exporters that are either foreign-controlled or have foreign affiliates, from 84 % in Denmark to 58 % in Sweden (see Figure 9). When comparing this with employment, shown earlier in Figure 5, it is clear that these multinational exporters have higher shares in exports than in employment. Apparently they benefit from the advantages of being part of an enterprise group and are able to generate more exports per employee than domestically controlled enterprises without foreign affiliates.
As revealed in the international enterprise analysis, when it comes to domestically controlled exporters, Denmark shows a quite different pattern from the other countries. Almost 50 % of total exports are generated by domestically controlled exporters with foreign affiliates, primarily due to some Danish strongholds in specific industries such as pharmaceuticals. Furthermore, from 2008 to 2012, the export share of Danish domestically controlled exporters without foreign affiliates dropped by 23 %. In the same period, the export share of domestically controlled exporters with foreign affiliates dropped by only 2 %.
Export intensity[3], is an important indicator of the degree of enterprise involvement in international trade. With export intensity close to 50 % or more for most countries, Figure 10 clearly illustrates how vital exports are in the manufacturing sector across countries. Furthermore, the figure illustrates that export intensity in manufacturing, not surprisingly, is higher for foreign-controlled exporters than domestically controlled exporters. This is especially the case in Finland and Portugal which both show a significant difference between domestically and foreign-controlled exporters.
Finally, in most countries, both domestically and foreign-controlled exporters show a small increase or a stable progress in export intensity from 2008 to 2012. Only Latvia for foreign-controlled and Germany for domestically controlled exporters shows a slightly higher increase from 2008 to 2012.
Figure 11 illustrates that foreign-controlled exporters generate more exports per employee than domestically controlled traders. This indicator also shows an increase from 2008 to 2012 for all countries. However, while the comparative levels for domestically and foreign-controlled exporters for most countries have not changed much from 2008 to 2012, Denmark and Sweden saw a larger increase in exports per employee (FTE) in foreign-controlled than in domestically controlled exporters.
Characteristics of importers
Given the more direct importance of exports to domestic economic growth and employment, political interest has focused on exporting enterprises. But imports are also a major contributor to the competitiveness of the domestic economy. They provide access to the raw materials, intermediate goods and technologies that are not so easily available for domestic enterprises and consumers. So far, importing enterprises have attracted less attention than exporting ones, but enterprises that facilitate imports for possible inputs to domestic production — and their characteristics and performance —also have policy relevance.
This article gives a first insight into the characteristics of enterprises importing goods in wholesale and retail trade (NACE Rev. 2 section G). Figure 12 provides an overview of how import shares are divided between domestic and foreign-controlled importers in wholesale and retail trade. In general, the shares are fairly equal for domestically and foreign-controlled importers. In the majority of participating countries, the shares were either stable or there was a small increase in import shares of foreign-controlled importers between 2008 and 2012. However, in Denmark, Portugal and Sweden, foreign-controlled importers had a smaller share of imports in 2012.
As was the case for exports, the greater share of imports in 2012 came from multinational importers that are either foreign-controlled or have foreign affiliates, from close to 60 % in Denmark and Austria to 64 % in Latvia and 66 % in Sweden (see Figure 13).
Just as export intensity is defined as exports divided by turnover, import intensity [4] is defined as imports divided by purchases of goods and services. In both cases, they represent the share of a total that comes from abroad. In the case of import intensity, the denominator has purchases of both goods and services whereas imports contain only goods. Similarly in the case of export intensity, the denominator also includes services. However it is well-known that both imports and exports contain a service component and therefore it is justifiable to calculate the export and import intensities in this way.
In all countries, import intensity is higher in foreign-controlled enterprises than in domestically controlled enterprises (see Figure 14). Generally, it was fairly stable between 2008 and 2012 except for foreign-controlled Norwegian enterprises where it increased by almost a quarter. The highest import intensity both in domestically and foreign-controlled enterprises is found in Sweden.
Data sources and availability
New statistics on enterprises have traditionally been produced by carrying out surveys. Microdata linking presents an innovative approach to obtaining new information on the economic performance of enterprises by linking different existing statistical sources at individual enterprise level (microdata level). This approach does not require new surveys to be carried out and thus does not increase the burden placed on enterprises. Due to statistical confidentiality issues it is not possible to publish microdata on the Eurostat website. However in the future Eurostat aims at publishing aggregated tables based on microdata analysis in its database.
Context
Economic globalisation and the participation of enterprises in international trade in goods are important drivers for growth: as a consequence an increasing number of enterprises are active internationally. This article uses results from the latest European microdata linking project, in which, for the first time ever, the Structural Business Statistics enterprise population was consistently divided into those who trade internationally and those who are active on domestic markets only. This is important because these two groups of enterprises are known to behave differently. Accordingly the enterprises were divided along two dimensions: international trade and control as explained in the article below.
In the international trade-dimension exporters, importers, two-way traders and enterprises not involved in international trade were distinguished. To avoid having occasional traders in one of the first three groups only importers (exporters) with an import (export) value of at least 5000 euro and an import intensity (export intensity) of at least 5 % were included. In the control dimension there are foreign-controlled and domestically controlled enterprises. In some parts the domestically controlled enterprises are broken down into those with foreign affiliates and those without foreign affiliates.
See also
- Statistics on small and medium-sized enterprises
- Business economy - size class analysis
- Microdata linking international sourcing
- Foreign affiliates employment by business function
- Entrepreneurship - statistical indicators
Further Eurostat information
Source data for tables, figures and maps (MS Excel)
- ↑ M. Melitz, ‘The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity’, Econometrica 71(6), 2003 and Helpman, E. et al., ‘Export versus FDI with Heterogeneous Firms’, The American Economic Review 94(1), 2004
- ↑ In the remainder of the article this group is called "domestic enterprises" (not to be confused with domestically controlled enterprises).
- ↑ Export intensity is equal to exports divided by turnover
- ↑ Import intensity is equal to imports divided by purchases of goods and services