Archive:Statistics comparing enterprises which trade internationally with those who do not

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Economic globalisation and the participation of domestic 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 enterprises trading internationally differ substantially from enterprises that are active only in domestic markets.

This article uses the results of eight European countries that participated in a micro-data linking (MDL) project. Each participating country constructed a national database with tailor-made, harmonised contents. This enables data analysis at enterprise level, comparing international and domestic enterprises. It also enables analysis of differences according to type of trading and/or ownership.

This article analyses manufacturing enterprises in the eight European countries taking part in this project (Austria, Denmark, Finland, Germany, Latvia, Norway, Portugal and Sweden). It splits the population into those taking part in international trade in goods — being an exporter or importer — and those that do not have such cross-border activities.

Exporters are of special interest for policy makers because of their potential job creation due to demand from markets abroad. Therefore, this article focuses on the employment and economic performance of exporters compared with non-exporters. Furthermore, exporters are classified by ownership (domestically or foreign-owned) and by type of international trade (exporters or two-way traders).

Given the more direct importance of exports for economic performance and employment, political interest has focused on exporting enterprises. But imports also contribute to the competitiveness of the domestic economy since they facilitate access to the raw materials, intermediate goods and technologies that are not so easily available for domestic enterprises and consumers. Thus, in addition to analysing exporters in manufacturing, this article also briefly characterises importers by looking at differences between domestically and foreign-owned enterprises in wholesale and retail trade.

The national databases cover reference years 2008 and 2012; this time span enables the analysis of developments since the economic crisis started. The statistics explained on "Economic globalisation indicators in manufacturing, wholesale and retail trade" compared manufacturing (NACE Rev. 2 section C) with wholesale and retail trade (NACE Rev. 2 section G), showing a clear difference in the export and import shares for these sectors. Manufacturing typically has greater shares of exports while wholesale and retail trade has greater shares of imports. The economic sections analysed in this article were chosen based on these findings; therefore this article analyses the manufacturing exports and the wholesale and retail trade imports.

Table, Figure or Map X: Full title of the Table, Figure or Map
Source: Eurostat (educ_ilang)

Main statistical findings

• 23 per cent of all manufacturing enterprises in the eight participating countries are international enterprises. Denmark and Austria have the highest rates (around 40 per cent); Germany is a little above average (25 per cent) while other countries were below the average.
• These international enterprises are very important for employment; they account for 76 per cent of total employment, ranging from just under 90 per cent (Austria and Denmark) to 68 per cent (Portugal and Norway).
• Accordingly, the number of employees per enterprise is on average much larger in international enterprises than in domestic enterprises. On average, the largest international enterprises are in Finland while the largest domestic enterprises are in Germany.
• The levels of international enterprises under foreign ownership ranges from 4.6 per cent in Portugal to 21.2 per cent in Latvia. Sweden (17.0) and Finland (11.9) are the only other countries with rates of more than 10 per cent.
• In most countries, exporters lost fewer jobs since the start of the crisis compared with non-exporters; the exceptions were the Nordic countries (Finland, Norway and Sweden).
• In all countries except Finland and Norway, value added creation is higher for exporters than for non-exporters. In all countries except Finland and Portugal, exporters have surpassed the pre-crisis level in value added creation. This is also the case for non-exporters in Austria, Norway and Sweden.
• Foreign-owned 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 full-time equivalent employment (FTE) were higher in foreign-owned than in domestically owned exporters.
• Foreign-owned wholesale and retail importers account for the highest levels of imports in most countries. In 2012, in Sweden, they accounted for 62 per cent of total imports of goods.
• In all countries, import intensity is higher in foreign-owned than in domestically owned importers.

Characteristics of international and domestic enterprises

In 2012, in the eight European countries taking part in this project, 93.817 of 413.781 manufacturing enterprises — or 23 per cent — can be characterised as international enterprises (importers, exporters or two-way traders). The proportion of international enterprises in manufacturing differs from country to country (see table 1). The highest levels, around 40 per cent, are in Austria and Denmark. Between 2008 and 2012, the number of international enterprises 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 increase in the number of domestic enterprises grew with three per cent while the number of international enterprises grew with less than half a per cent..

In 2012, the international enterprises employed slightly more than 7.5 million employees (FTE) compared with less than 2.4 million in domestic enterprises. These international enterprises are very important for employment: they account for 75 per cent of total employment, ranging from nearly 90 per cent in Austria and Denmark to 68 per cent in Portugal and Norway(see table 2).

Comparing tables 1 and 2, we see that the number of international enterprises is much smaller than the number of domestic enterprises, but that the reverse is true for employment. As a result, international enterprises are much larger than domestic enterprises (see figure 1). In 2012, in the eight countries considered, international enterprises had on average 76 employees (FTE) compared with 6.3 in the domestic enterprises. Accordingly, the number of employees per enterprise is, on average, much larger in international enterprises than in domestic enterprises. On average, the largest international enterprises are in Finland while the largest domestic enterprises are in Germany.

Not surprisingly, the majority of international enterprises in manufacturing are domestically owned (see figure 2); in most countries, domestically owned enterprises constitute at least 90 per cent of all international enterprises. The exceptions are Latvia (78 per cent), Sweden (83 per cent) and Finland (88 per cent). This pattern has not been influenced by the economic crisis as the proportions remained stable from 2008 to 2012.

Although in manufacturing domestically owned international enterprises — as a group — have more employees than foreign-owned, 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 owned international enterprises in all countries. On average for all countries, foreign-owned international enterprises in 2012 employed 168 full-time employees compared with only 50 for domestically owned international enterprises.

For some countries, it is possible to further divide domestically owned international enterprises into those with and those without foreign affiliates (see figure 4). This shows that the highest levels of employment are in domestically owned international enterprises 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 owned enterprises without foreign affiliates, and a much higher proportion of domestically owned international enterprises (not shown in the figure) do not have foreign affiliates. An exception to this is Denmark where employment levels of domestically owned international enterprises — with and without foreign affiliates — are almost equal.

Characteristics of exporting and non-exporting enterprises

This section provides insights into the employment levels 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 ownership (foreign/domestically owned) 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.

Although only German exporters have regained their pre-crisis employment levels, exporters in seven of the eight countries have regained and even surpassed the pre-crisis level for value added (see figure 6). By combining the information in figures 5 and 6, we can conclude that in most countries exporters have increased their productivity more than non-exporters.

In most countries, a relatively large proportion of exports is generated by foreign-owned traders but different development patterns can be identified (see figure 7). In Denmark, Germany (since 2009), Norway and Sweden, domestically owned international enterprises lost export shares 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 per cent of total exports in all countries except Denmark, Finland and Latvia (see figure 8). This rate was stable at around 90 per cent 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-owned exporters with domestically owned exporters with and without foreign affiliates. The results show that — except for Latvia — the greater proportion of exports in 2012 was generated by multinational exporters that are either foreign-owned or have foreign affiliates, from 84 per cent in Denmark to 58 per cent in Sweden (see figure 9). When comparing this with employment (shown earlier in figure 5), it is clear that these multinational exporters have higher export rates than employment rates. Apparently they benefit from the advantages of being part of an enterprise group and are able to generate more exports per employee than purely domestic owned enterprises without foreign affiliates.

As revealed in the international enterprise analysis, when it comes to domestically owned exporters, Denmark shows a quite different pattern from the other countries. Almost 50 per cent of total exports are generated by domestically owned exporters with foreign affiliates, primarily due to some Danish strongholds in specific industries such as pharmaceuticals. Furthermore, from 2008 to 2012, the export rate of Danish domestically owned exporters without foreign affiliates dropped 23 by per cent. In the same period, the export rate of domestically owned exporters with foreign affiliates dropped by only 2 per cent.

Export intensity is an important indicator of the degree of enterprise involvement in international trade. With export intensity close to 50 per cent 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-owned exporters than domestically owned exporters. This is especially the case in Finland and Portugal which both show a significant difference between domestically and foreign-owned exporters.

Finally, in most countries, both domestically and foreign-owned exporters show a small increase or a stable progress in export intensity from 2008 to 2012. Only Latvia for foreign-owned and Germany for domestically owned exporters shows a slightly higher increase from 2008 to 2012.

. Figure 11 illustrates that foreign-owned exporters generate more exports per employee than domestically owned traders. This indicator also shows an increase from 2008 to 2012 for all countries. However, while the comparative levels for domestically and foreign-owned exporters for most countries has not changed much from 2008 to 2012, Denmark and Sweden saw a larger increase in exports per full-time equivalent employment in foreign-owned than in domestically owned exporters.

Characteristics of importing and non-importing enterprises

Given the more direct importance of exports on 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-owned importers in wholesale and retail trade. In general, the shares are fairly equal for domestically and foreign-owned importers. In the majority of participating countries, the shares were either stable or there was a small increase in import rates of foreign-owned importers between 2008 and 2012. However, in both Denmark, Portugal and Sweden, foreign-owned 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-owned or have foreign affiliates, from close to 60 per cent in Denmark and Austria to 66 per cent for Sweden (see figure 13).

Just as we define export intensity as exports divided by turnover, we calculate import intensity 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, we divide by purchases of goods and services whereas the imports contain only goods. In the case of export intensity, we divide by turnover, which 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-owned enterprises than in domestically owned enterprises (see figure 14). Generally, it was fairly stable between 2008 and 2012 except for foreign-owned Norwegian enterprises where it increased by almost a quarter. The highest import intensity both in domestically and foreign-owned enterprises is found in Sweden.

Data sources and availability

New statistics on enterprises have traditionally been produced by carrying out surveys. Micro data 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 (micro data 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 micro data on the Eurostat website. However in the future Eurostat aims at publishing aggregated tables based on micro data analysis in its database.  

See also

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Further Eurostat information

Source data for tables, figures and maps (MS Excel)

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Notes

This section briefly describes terms and definitions used in the paper.

• Export intensity

Export intensity is the share of exports in turnover.

• Import intensity

Import intensity is the share of imports in purchases of goods and services.

Trade typology

• International enterprise

International enterprises are enterprises that are engaged in exports or imports, or both, in accordance with the definition of exporters and importers mentioned below.

• Exporters

Exporters are enterprises that have exports greater than EUR 5 000 and export intensity of at least 5 per cent.

• Importers

Importers are enterprises that have imports greater than EUR 5 000 and import intensity of at least 5 per cent.

• Two-way traders

Two-way traders are enterprises that are engaged in both exports and imports.

• Domestic enterprise

Domestic enterprises are enterprises that are not engaged in any trading activities above the thresholds mentioned above.

Ownership typology

• Domestically owned enterprises

Enterprises with domestic ownership; they can be either with or without foreign affiliates.

• Foreign-owned enterprises

Enterprises with foreign ownership.

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