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What drives export market shares? It depends! An empirical analysis using Bayesian model averaging

  • K. Benkovskis
  • B. Bluhm
  • E. Bobeica
  • C. OsbatEmail author
  • S. Zeugner
Article
  • 9 Downloads

Abstract

What drives external performance of countries? This is a recurring question in academia and policy circles. The factors underlying export growth are receiving great attention, as countries endeavoured 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 common characteristics of countries that have a very good external performance are and, importantly, which ones policy makers can influence. We use Bayesian model averaging in a panel setting to investigate variables related to export market shares in 25 EU countries, considering a wide range of traditional indicators along with novel ones developed within the CompNet Competitiveness Research Network. We find that export market share growth is linked to different factors in the old and in the new 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 old EU member states, investment, quality of institutions and available liquidity 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 rather 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 member states, but only when they are adjusted for quality.

Keywords

Export shares Competitiveness Bayesian model averaging 

JEL Classification

C23 C51 C55 F14 O52 

Notes

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  • K. Benkovskis
    • 1
  • B. Bluhm
    • 2
  • E. Bobeica
    • 3
  • C. Osbat
    • 3
    Email author
  • S. Zeugner
    • 4
  1. 1.Latvijas Banka and Stockholm School of Economics in RigaRigaLatvia
  2. 2.Westhouse Consulting GmbHFrankfurt am MainGermany
  3. 3.European Central BankFrankfurt am MainGermany
  4. 4.European CommissionBrusselsBelgium

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