A Note on the firm size-export relationship

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The positive relationship between firm size and direct exports is often considered as a stylized fact. Numerous econometric investigations back theoretical considerations by showing that a ceteris paribus positive relationship between firm size and direct export activities exists. This note contributes to the literature by closely looking at an econometric modelling issues that has largely been neglected hitherto. Various approaches used in the literature to model the exports/sales ratio, which is a percentage variable with usually many observations at the lower limit, are discussed. It is argued that all these methods are seriously flawed, and an alternative approach is suggested that is applied using data from a large comprehensive recent survey of German manufacturing establishments. Furthermore, the relation between firm size and exports is examined in four selected industries to test whether the importance of economies of scale and transaction cost efficiencies vary considerably between industries.

Original languageEnglish
Title of host publicationMicroeconometric Studies Of Firms Imports And Exports : Advanced Methods Of Analysis And Evidence From German Enterprises
EditorsJoachim Wagner
Number of pages14
PublisherWorld Scientific Publishing Co.
Publication date25.02.2021
ISBN (Print)9781786349682
ISBN (Electronic)9781786349705
Publication statusPublished - 25.02.2021