Recommended
Recommended
More Related Content
What's hot
What's hot (19)
Viewers also liked
Viewers also liked (20)
Similar to Are Mena’s exporters fighting with their hands tied? New firm-level evidence
Similar to Are Mena’s exporters fighting with their hands tied? New firm-level evidence (20)
More from Economic Research Forum
More from Economic Research Forum (20)
Recently uploaded
Recently uploaded (10)
Are Mena’s exporters fighting with their hands tied? New firm-level evidence
- 1. Are MENA’s exporters fighting with their hands tied? New firm-level evidence MENA Chief Economist - ERF Flagship ERF Annual Conference Cairo, March 21, 2013
- 2. Motivation What we know • Political events reshaping MENA region emphasize the importance of a more inclusive development path for political stability and accelerated growth. • Promoting trade is pivotal to enable sustained economic growth. • Numerous studies at aggregate trade level highlight MENA’s weak performance in trade and diversification but • Countries do not export, firms do What we do not know • No systematic information on firm-level exporter behavior largely because of a lack of data • Account for heterogeneity: Aggregate data hide a lot of heterogeneity across firms, and within firms across products/markets
- 3. This Study 3 Objectives i. Assemble new data : Exploit Novel multi-country exporter-level dataset universe of exporters in several MENA countries - Egypt, Iran, Jordan, Kuwait, Lebanon, Morocco, and Yemen - and many comparator countries i. Assemble a number of original stylized facts on exporters in MENA ii. Better understand the micro-foundation of low export growth and diversification in the region. 3 Questions i. How do MENA exporters compare to the rest of the word in terms of characteristics, growth and diversification patterns? ii. What drives and what constrains MENA exporters’ growth and diversification? iii. How can policies and institutions be devised to better promote MENA exporters’ performance and dynamics?
- 4. Today’s Event 1. MENA’s “exporters fabric” is weak – Who are Exporters in MENA – MENA missing superstars? 2. An improved trade-policy environment – Improved access to imported intermediates impacts firm-level performance – But non-tariff measures have complex effects • Dovis Jaud (harmonization) • El Enbaby Hendy (SPS Egypt) 3. But a business environment that remains distortionary – Weak financial markets and governance penalize key sectors – Corruption and red tape are prevalent • Hendy Zaki: Red tape Egypt • Rijkers Freund Nucifora: State capture 4. The impact of political instability • Haidar (sanctions) • Von der Weide et al (West Bank)
- 5. MENA’s “exporters fabric” is weak (Fernandes, 2014; Brunel, Fernandes, Jaud, 2014) • #1 : MENA countries have fewer exporters with smaller average size but higher median size and lower concentration of market shares • #2: Exporters in MENA are generally less diversified in terms of products and destination markets • #3: Firm entry and exit into export markets and survival of new exporters are not different in MENA on average but there is important heterogeneity across countries • #4: Growth in exports in short-term and over longer-term is driven by expansion of continuing firms, continued destinations, and continued products
- 6. Exporter-Level Data - Indicators • Exporter Dynamics Database (Cebeci, Fernandes, Freund, and Pierola , 2012) which uses multi-country exporter-level data collected from customs agencies (1991-2011) – Dataset is at exporting country-firm-HS4-digit product-destination-year level covering universe of export transactions in agriculture, manufacturing and mining (excluding HS 27 - oil) – Originally data at HS6-digit but HS4-digit used to cover Egypt • Benchmarking MENA exporters vs ROW: – Basic characteristics: N of exporters, exporter size (export value) – Concentration/diversification: share of top x% exporters, N of products or destinations per exporter – Firm dynamics: exporter entry, exit and one-year survival rates 37 developing countries 8 developed countries Egypt Iran Jordan Kuwait Lebanon Morocco Tunisia Yemen
- 7. # 1 Base, Size and Concentration of MENA Exporters
- 8. Fact 1: MENA region has fewer exporters • MENA region as whole has fewer exporters than predicted for comparable income per capita and size levels - Lebanon and Morocco are exceptions in MENA • Trends. Mostly stagnating-declining Log Number of Exporters Log Number of Exporters MENA Dummy -0.461*** (0.124) Egypt Dummy -0.379*** (0.087) Iran Dummy -0.661*** (0.102) Jordan Dummy 0.059 (0.052) Kuwait Dummy -1.480*** (0.111) Lebanon Dummy 0.189** (0.084) Morocco Dummy 0.127** (0.062) Yemen Dummy -1.317*** (0.065) Log GDP pc Yes Yes Log GDP Yes Yes Year Fixed Effects Yes Yes Observations 183 183 R-squared 0.877 0.907 505 1,869 3,315 4,977 5,445 6,506 7,314 8,370 13,770 13,804 15,023 44,570 0 10,000 20,000 30,000 40,000 50,000 Number of Exporters Yemen Jordan Kuwait Lebanon Morocco Bangladesh Chile Egypt Iran Bulgaria Pakistan Turkey Averages for 2006-2008 period Based on Fernandes (2014).8 1 1.21.4 2008 2009 2010 2011 2012 Egypt Iran Jordan Lebanon Morocco Yemen Number of Exporters - Relative to 2008
- 9. Fact 1: MENA exporters have smaller average size but higher median size • Different pattern for average vs median exporter size in MENA and some exceptions on average size 0.7 0.8 0.9 0.9 0.9 1.1 1.7 1.8 2.0 2.2 2.8 8.3 0 2 4 6 8 Average Exporter Size in Millions of USD Lebanon Yemen Kuwait Bulgaria Iran Pakistan Egypt Jordan Bangladesh Turkey Morocco Chile 0.022 0.027 0.040 0.048 0.049 0.057 0.062 0.065 0.088 0.089 0.105 0.277 0 .1 .2 .3 Median Exporter Size in Millions of USD Bulgaria Kuwait Lebanon Yemen Chile Jordan Pakistan Egypt Iran Morocco Turkey Bangladesh Log Average Exporter Size Log Average Exporter Size Log Median Exporter Size Log Median Exporter Size MENA Dummy -0.481*** 0.408*** (0.118) (0.099) Egypt Dummy -0.476*** 0.177 (0.103) (0.178) Iran Dummy -1.241*** 0.374*** (0.151) (0.140) Jordan Dummy 0.205*** 0.785*** (0.077) (0.141) Kuwait Dummy -1.007*** 0.082 (0.137) (0.249) Lebanon Dummy -0.949*** 0.394** (0.108) (0.161) Morocco Dummy 0.233*** 0.701*** (0.075) (0.106) Yemen Dummy -0.782*** 0.158 (0.066) (0.119) Log GDP pc Yes Yes Yes Yes Log GDP Yes Yes Yes Yes Year Fixed Effects Yes Yes Yes Yes Observations 183 183 183 183 R-squared 0.318 0.414 0.234 0.245 Averages for 2006-2008 period
- 10. Fact 1: Concentration of exporter market shares in MENA is relatively low • Despite being high in absolute terms in most MENA countries exporter size distribution is not particularly concentrated • Share of top 5% exporters is significantly lower in MENA region controlling for GDPpc, GDP, time effects 0.50 0.65 0.72 0.73 0.74 0.79 0.80 0.80 0.83 0.83 0.86 0.94 0 .2 .4 .6 .8 1 Share of Top 5% Exporters Bangladesh Yemen Iran Pakistan Morocco Egypt Turkey Lebanon Bulgaria Jordan Kuwait Chile Averages for 2006-2008 period
- 11. # 2 Diversification of MENA Exporters Dynamics of MENA Exporters
- 12. Fact 2: MENA exporters are less diversified 2 3 3 4 4 4 4 5 5 5 6 0 2 4 6 Average Number of HS 4-digit Products per Exporter Jordan Bangladesh Chile Yemen Kuwait Egypt Pakistan Bulgaria Morocco Iran Lebanon 2 2 2 2 3 3 3 3 3 3 4 4 0 1 2 3 4 Average Number of Destinations per Exporter Kuwait Iran Yemen Bulgaria Morocco Egypt Lebanon Jordan Pakistan Chile Bangladesh Turkey • Substantial heterogeneity across exporters in each country • Lebanon is only exception in MENA with more diversified exporters Averages for 2006-2008 period
- 13. Extra on diversification of MENA exporters • MENA firms mostly export 1 product to 1 destination as do firms in other developing countries … • … but more diversified firms account for a smaller share of total exports in MENA than elsewhere Based on Brunel, Fernandes, and Jaud (2014) 1 2 3 4-10 11+ Total Share of exporting firms (%) 1 30.0 8.1 4.0 8.0 3.9 54.1 2 3.4 4.1 2.2 4.2 1.9 15.8 3 1.2 1.3 1.2 2.9 1.4 8.0 4-10 1.6 1.8 1.6 6.4 5.1 16.4 11+ 0.2 0.3 0.3 1.6 3.2 5.7 Total 36.4 15.6 9.2 23.1 15.7 100.0 Share of total exports (%) 1 1.2 0.6 0.4 1.7 6.5 10.4 2 0.4 0.3 0.3 1.1 2.8 4.9 3 0.3 0.2 0.2 0.8 2.4 3.9 4-10 1.0 1.0 1.1 4.3 9.5 16.9 11+ 0.8 1.7 1.1 8.4 51.8 63.8 Total 3.8 3.9 3.1 16.3 73.0 100.0 All Developing Countries Number of Products NumberofDestinations 1 2 3 4-10 11+ Total Share of exporting firms (%) 1 30.0 8.5 4.2 8.9 4.2 55.9 2 3.7 4.3 2.1 4.1 1.9 16.1 3 1.3 1.5 1.2 2.7 1.4 8.0 4-10 1.5 2.5 1.7 5.7 4.3 15.7 11+ 0.2 0.4 0.3 1.2 2.3 4.3 Total 36.7 17.1 9.4 22.7 14.1 100.0 Share of total exports (%) 1 1.8 1.3 1.0 3.5 4.0 11.6 2 1.0 0.8 0.7 2.6 2.7 7.8 3 0.5 0.6 0.5 1.9 1.7 5.2 4-10 1.9 2.4 2.3 9.0 11.0 26.7 11+ 1.5 3.3 1.0 11.4 31.4 48.7 Total 6.8 8.4 5.5 28.4 50.9 100.0 MENA Countries NumberofDestinations Number of Products Averages for 2006-2008 period
- 14. Extra on how MENA exporters diversify markets • New exporters begin exporting gradually in MENA and elsewhere • Few exporters to 1 market expand to more markets and many exit • Volatility in markets served by exporters is especially strong in MENA 0 1 2 3 4 5 6-10 11-25 25+ +4 markets or more 3.1% 1.0% 2.6% 3.3% 3.8% 5.3% 8.1% 9.6% 19.0% +3 markets 2.4% 0.9% 1.7% 2.0% 2.9% 3.4% 3.3% 4.5% 4.4% +2 markets 6.6% 2.2% 4.1% 4.6% 4.9% 4.3% 5.1% 5.1% 4.8% +1 market 40.0% 7.2% 9.6% 10.1% 10.4% 9.1% 8.5% 7.0% 3.2% No change 48.0% 39.4% 23.2% 18.0% 13.9% 13.7% 10.1% 7.2% 4.8% -1 market 0.0% 49.4% 29.2% 21.6% 16.3% 13.5% 12.0% 8.9% 7.3% -2 markets 0.0% 0.0% 29.5% 19.5% 16.3% 13.6% 10.9% 6.9% 4.4% -3 markets 0.0% 0.0% 0.0% 20.8% 14.9% 12.5% 8.8% 7.4% 6.5% -4 markets or more 0.0% 0.0% 0.0% 0.0% 16.5% 24.7% 33.3% 43.4% 45.6% ChangeinDestinationsin Yeart+1 Number of Destinations in Year t MENA countries 0 1 2 3 4 5 6-10 11-25 25+ +4 markets or more 2.3% 0.8% 2.3% 3.5% 4.6% 5.4% 7.6% 12.7% 18.6% +3 markets 2.0% 0.9% 2.1% 2.8% 3.9% 4.2% 4.8% 6.0% 6.6% +2 markets 6.7% 2.5% 4.9% 6.0% 6.6% 6.6% 7.4% 7.3% 5.8% +1 market 46.2% 8.7% 12.0% 12.5% 12.4% 12.1% 11.1% 9.6% 6.9% No change 42.7% 45.9% 27.0% 22.3% 19.3% 17.8% 14.5% 10.5% 7.5% -1 market 0.0% 41.2% 30.2% 23.1% 19.2% 17.4% 15.2% 10.9% 7.0% -2 markets 0.0% 0.0% 21.4% 17.4% 15.4% 14.2% 12.5% 9.5% 7.5% -3 markets 0.0% 0.0% 0.0% 12.3% 10.2% 9.4% 8.9% 7.7% 6.3% -4 markets or more 0.0% 0.0% 0.0% 0.0% 8.3% 12.8% 18.0% 25.8% 33.8% ChangeinDestinationsin Yeart+1 Number of Destinations in Year t All developing countries Based on Brunel, Fernandes, and Jaud (2014) Averages for 2006-2008 period
- 15. # 3 Dynamics of MENA Exporters
- 16. Fact 3: Exporter turnover rates are not different in MENA on average but are higher in oil-exporting countries 0.25 0.28 0.28 0.32 0.33 0.35 0.38 0.38 0.38 0.47 0.52 0.53 0 .1 .2 .3 .4 .5 Exporter Entry Rate Egypt Pakistan Bangladesh Turkey Morocco Lebanon Jordan Bulgaria Chile Iran Yemen Kuwait 0.22 0.27 0.27 0.29 0.32 0.34 0.35 0.37 0.40 0.51 0.53 0.54 0 .2 .4 .6 Exporter Exit Rate Bangladesh Pakistan Egypt Turkey Jordan Morocco Chile Lebanon Bulgaria Iran Kuwait Yemen Averages for 2006-2008 period
- 17. Fact 3: New exporters’ survival rates are not different in MENA on average but there is heterogeneity 0.02 0.02 0.03 0.04 0.04 0.05 0.05 0.05 0.07 0.17 0.20 0.24 0 .05 .1 .15 .2 .25 Share of Entrants in Total Exports Chile Morocco Egypt Bulgaria Bangladesh Turkey Pakistan Jordan Lebanon Iran Yemen Kuwait 0.35 0.36 0.41 0.43 0.49 0.51 0.55 0.56 0.61 0 .2 .4 .6 1-Year Survival Rate of New Exporters Chile Lebanon Iran Morocco Jordan Egypt Turkey Pakistan Bangladesh Averages for 2006-2008 period • Relatively lower survival rates of new exporters in Iran, Lebanon, Morocco, and Yemen. • A low degree of export survival in a country is problematic because failures have a cost. Suggest that beyond experimentation the difficult business environment increases the proportion of accidental failures. (Brenton, Cadot, and Pierola, 2012)
- 18. Profile of MENA Exporters across Sectors • Indicators of exporter competitiveness by country-sector-year. • Examine the differences in size, concentration, diversification, and dynamics of exporters across broad types of sectors: primary products and commodities, natural resource-based manufacturing, low-tech manufacturing, and medium/high-tech manufacturing. • Most of the stylized facts are still verified within sectors (i.e. after controlling for sector fixed effects) • Basically the under-performance is not due to MENA specializing in particular types of sectors.
- 19. # 4 Sources of Export Growth in MENA Countries: Intensive vs. Extensive Margins
- 20. Fact 4: Short-term export growth is driven by continuing exporters, destinations, and products 2011-2012 export growth decomposition • Clear dominance of intensive margin • Similar to evidence for other countries 18.60 0.10 1.500.20 -1.30 2.40 -8.20 -3.80 -36.30 -1.60 -40-20 0 20 Jordan Lebanon Egypt Morocco Yemen Continuing exporters Net entry of exporters 18.10 -0.30 1.500.00 -0.60-0.60 -8.90 0.70 -29.00 -7.30 -40-20 0 20 Jordan Lebanon Egypt Morocco Yemen Continued destinations Net entry of destinations 17.80 0.30 1.400.10 -0.800.20 -9.60 0.70 -1.60 -27.40 -30-20-10 0 1020 Jordan Lebanon Egypt Morocco Yemen Continued products Net entry of products
- 21. Fact 4: Short-term export growth is driven by continuing firms, destinations, and products • But gross turnover is very high in some countries and periods 18.60 3.20 -3.10 1.50 3.20 -3.00 -1.30 4.70 -2.30 -8.20 4.10 -7.90 -36.30 5.30 -6.90 -40-20 0 20 Jordan Lebanon Egypt Morocco Yemen Continuing exporters New exporters Exiting exporters 18.10 3.40 -3.70 1.50 6.10 -6.10 -0.60 6.60 -7.20 -8.90 4.30 -3.60 -29.00 4.90 -12.20 -40-20 0 20 Jordan Lebanon Egypt Morocco Yemen Continued destinations New destinations Exiting destinations 17.80 5.90 -5.60 1.40 5.70 -5.60 -0.80 4.50 -4.30 -9.60 3.80 -3.10 -1.60 5.70 -33.10 -40-20 0 20 Jordan Lebanon Egypt Morocco Yemen Continued products New products Exiting products 2011-2012 export growth decomposition
- 22. Fact 4: Longer-term export growth is driven by continuing firms, destinations, and products 2008-2012 export growth decomposition • Dominance of intensive margin is NOT similar to evidence for other countries • Turnover across firms in export markets in MENA does not generate tangible export growth 17.10 12.60 22.50 0.60 21.40 -4.40 -16.10 5.60 -25.60 9.10 -40-20 0 2040 Jordan Lebanon Egypt Morocco Yemen Continuing exporters Net entry of exporters 15.90 7.10 3.80 18.70 -2.80 24.20 -16.60 0.60 -5.40 -20.10 -30-20-10 0 1020 Jordan Lebanon Egypt Morocco Yemen Continued destinations Net entry of destinations 12.30 3.70 3.60 0.20 2.90 -5.70 13.60 -19.00 -17.50 0.80 -20-10 0 1020 Jordan Lebanon Egypt Yemen Morocco Continued products Net entry of products
- 23. Fact 4: Longer-term export growth is driven by continuing firms, destinations, and products • High degree of turnover across exporters, destinations and products in MENA does not always generate tangible export growth 17.10 32.00 -19.40 22.50 16.40 -15.80 21.40 19.20 -23.60 -16.10 21.30 -15.70 -25.60 26.80 -17.70 -50 0 50 Jordan Lebanon Egypt Morocco Yemen Continuing exporters New exporters Exiting exporters 15.90 12.50 -5.40 3.80 33.60 -14.90 -2.80 48.10 -23.90 -16.60 8.70 -8.10 -5.40 9.90 -30.00 -40-20 0 2040 Jordan Lebanon Egypt Morocco Yemen Continued destinations New destinations Exiting destinations 12.30 10.40 -6.70 3.60 7.70 -7.50 2.90 12.20 -17.90 13.60 11.60 -30.60 -17.50 7.40 -6.60 -40-20 0 20 Jordan Lebanon Egypt Yemen Morocco Continued products New products Exiting products 2008-2012 export growth decomposition
- 24. Lessons on Exporters in MENA • Reconciling the macro and micro: Low growth and diversification at macro result from (i) MENA exporters are smaller, less diversified, not particularly dynamic in MENA countries with a stronger manufacturing base (ii) MENA countries seem to lack large exporters and (to some extent) young exporters which drive export growth and diversification (Freund and Pierola, 2014) (iii) Conservative export growth strategies – little experimentation • Suggest several market and government failures: affect firms performance ad composition of the export sector. • Weak financial markets and limited access to finance • Weak governance penalize key sectors (Judy and Wood, 2014) • Red tape and corruption are prevalent (Hendy and Zaki, 2014; Rijkers, Freund and Nucifora, 2014) • Some testable hypotheses : domestic regulations, exchange rate and competitiveness issues, or non-tariff trade barriers deter MENA’s firms.
- 25. Thank you
- 26. Mena’s under-trading - Macro evidence Freund and Behar, 2011 • Cross-section gravity : MENA’s exports to the outside world is only 1/3 of potential in recent years, after controlling for the standard determinants of trade. • Evidence of convergence over the past 15 years: MENA’s exports have been expanding more rapidly than exports from the rest of the world. – Still, at historical growth rates, it would take 20 years for MENA countries to reach potential trade. • Non oil export : Exports are also only one third of the benchmark, but the improved export performance over time is much slower • Interestingly, while MENA also under-trades within the region, the extent of under-trading is less acute than with the outside world. – No indication of more rapid regional integration over time. Recent trade agreements among MENA countries have not stimulated regional trade to a greater extent than external trade.