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Small Open Economy Firms in International Trade: Evidence from Danish Transactions-Level Data

Tor Eriksson (), Valerie Smeets () and Frédéric Warzynski

No 09-7, Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics

Abstract: In this paper, we use a rich dataset disaggregating imports and exports decisions by product and origin/destination of all Danish companies for the period 1993-2003 to provide key elements in characterizing Danish firms in international trade. Most evidence to date emanates from the U.S. or developing economies like Columbia or Mexico. Benchmarking on these studies, we find some similarities but also differences which we think are representative of European-type, small open economies. We find that Danish exporters make up a fairly small fraction of the total of firms, but that this fraction is higher than in e.g., the U.S. Firms engaged in exporting have the same positive performance characteristics – size, capital and skilled labour intensity, labour as well as total factor productivity, and wages – found in also in previous studies. But most exporter premia are significantly larger in Denmark than in the U.S. There are few traces of the European Union’s Single Market Program and the adoption the Euro in 1998. We observe no impact of these changes on the number of exporters, but some signs of impacts on the number of products and export destination countries. Finally, we find that trade is positively related to productivity of firms. The association between productivity and the firm’s imports of intermediate goods is particularly strong.

Keywords: Exporters; exporter premium; firm heterogeneity (search for similar items in EconPapers)
JEL-codes: D21 F14 F23 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2009-05-15
New Economics Papers: this item is included in nep-bec and nep-int
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