What drives export market shares? It depends! An empirical analysis using Bayesian Model Averaging

Konstantins Benkovskis, Benjamin Bluhm, Elena Bobeica, Chiara Osbat and Stefan Zeugner
Additional contact information
Benjamin Bluhm: European Central Bank
Elena Bobeica: European Central Bank

No 2017/02, Working Papers from Latvijas Banka

Abstract: What drives external performance of countries? This is a recurring question in academia and policy. The factors underlying export growth are receiving great attention, as countries struggle to grow out of the crisis by increasing exports and as protectionist discourses take foot again. Despite decades of debates, it is still unclear what the drivers of external performance are and, importantly, which ones policy makers can influence. We use Bayesian Model Averaging in a panel setting to investigate the drivers of export market shares of 25 EU countries, considering a wide range of traditional indicators along with novel ones developed within the CompNet. We find that export market share growth is linked to different factors in the old and new EU Member States, with one exception: for both groups, competitive pressures from China have strongly affected export performance since the early 2000s. In the case of the old EU Member States, investment, the quality of institutions and liquidity available to firms also appear to play a role. For the new EU Member States, labour and total factor productivity are particularly important, while inward FDI matters more than domestic investment. Price competitiveness does not seem to play a very important role in either set of countries: relative export prices do show correlation with export performance for the new EU Member States, but only when they are adjusted for quality. Our results point to the importance of considering the "exporting stage" of a country when discussing export-enhancing policies.

Keywords: export shares; competitiveness; Bayesian Model Averaging (search for similar items in EconPapers)
JEL-codes: C23 C51 C55 F14 O52 (search for similar items in EconPapers)
Date: 2017-08-10
New Economics Papers: this item is included in nep-eff, nep-int and nep-tra
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: What drives export market shares? It depends! An empirical analysis using Bayesian model averaging (2020)
Working Paper: What drives export market shares? It depends! An empirical analysis using Bayesian Model Averaging (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ltv:wpaper:201702

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