Service Traders in the UK

We provide a novel set of stylized facts on firms engaging in international trade in services, using unique firm-level data on services exports and imports in the United Kingdom in 2000- 2005. Less than 10% of firms trade in services but they can be found in all sectors of the UK economy. While the services sector accounts for 80% of total exports and imports, the frequency and trade intensity of services traders is often higher in sectors such as high- tech manufacturing. Services traders are bigger, more productive and are more likely to be foreign owned or part of a multinational enterprise. These 'trade premia' are smaller then for goods traders, however, with the exception of skill intensity which is higher among services traders. There are also significant differences between exporters and importers of services. Furthermore, we show that most firms only export or import a single service type and trade with a small number of countries. Trade volume, employment, turnover and value added are highly concentrated among a small group of firms trading with many countries and/or in many services types. These firms are characterised by bigger size and higher than average productivity, all of which seem to be principally correlated with more trade along the intensive margin (trade per services and country) .although there are a number of noteworthy exceptions. Interestingly, trade is also concentrated within .rms. The top export and import destination make up 70% of the average firm's total trade and the top services type around 90%. This strong concentration is still present among firms trading with many countries and/or in many products.International trade, services, firm-level evidence

Multinationals and US Productivity Leadership: Evidence from Great Britain

We study the productivity of US owned plants in the UK. Using a new dataset that identifies foreign and domestic MNEs, we find that UK MNEs are less productive than US affiliates, but as productive as non US foreign affiliates. We investigate the source of the US and MNE advantage. We find evidence confirming that the MNE advantage is driven by sharing superior firm level assets across plants and by cherry picking the better plants in a country. The additional superiority of US firms seems entirely driven by their particular ability to takeover the best British plants. Thirdly, the study features a novel approach to TFP calculation.Multinational Firms, Productivity, Foreign Ownership, US leadership, Double Fixed-Effects

Productivity, Exporting and the Learning-by-Exporting Hypothesis: Direct Evidence from UK Firms

Case study evidence suggests that exporting firms learn from their clients. But econometric evidence, mostly using exporting and TFP growth, is mixed. We use a UK panel data set with firm-level information on exporting and productivity. Our innovation is that we also have direct data on the sources of learning (in this case about new technologies). Controlling for fixed effects we have two main findings. First, we find firms who exported in the past are more likely to then report that they learnt from buyers (relative to learning from other sources). Second, firms who had learned from buyers (more than they learnt from other sources) in the past are more likely to then have productivity growth. This suggests some support for the learning-by-exporting hypothesis, though is not clear whether firms deserve an exporting subsidy.Productivity, Exporting, Learning

Productivity, Exporting and the Learning-by-Exporting Hypothesis: Direct Evidence from UK Firms

Case study evidence suggests that exporting firms learn from their clients. But econometric evidence, mostly using exporting and TFP growth, is mixed. We use a UK panel data set with firm-level information on exporting and productivity. Our innovation is that we also have direct data on the sources of learning (in this case about new technologies). Controlling for fixed effects we have two main findings. First, we find firms who exported in the past are more likely to then report that they learnt from buyers (relative to learning from other sources). Second, firms who had learned from buyers (more than they learnt from other sources) in the past are more likely to then have productivity growth. This suggests some support for the learning-by-exporting hypothesis.Productivity, Exporting, Learning

Information Technology, Organisational Change and Productivity Growth: Evidence from UK Firms

We examine the relationships between productivity growth, IT investment and organisational change (Δ O) using UK firm panel data. Consistent with the small number of other micro studies we find (a) IT appears to have high returns in a growth accounting sense when Δ O is omitted; when Δ O is included the IT returns are greatly reduced, (b) IT and Δ O interact in their effect on productivity growth, (c) non-IT investment and Δ O do not interact in their effect on productivity growth. Some new findings are (a) Δ O is affected by competition and (b) we also find strong effects on the probability of introducing Δ O from ownership. US-owned firms are much more likely to introduce Δ O relative to foreign owned firms who are more likely still relative to UK firms.Information technology, Productivity growth, Organisational change

The future of productivity: What contribution can digital transformation make?

This article summarises emerging evidence on the relationship between productivity and the digital transformation, based on work underway in the OECD’s Going Digital project. The article starts by discussing the relationship between the global productivity slowdown and the diffusion of digital technologies and related processes across firms and industries. It then outlines the role of structural factors in digital adoption, before concluding with a brief discussion on policies to strengthen future productivity growth

A new approach for better industrial strategies

Industrial policy is back. After having been considered a taboo since the 1970s, “new industrial policies” are at the core of governments’ strategies to support countries during crises and enable the green and digital transitions. Virtually, every government has used and uses industrial policy, despite continued concerns related to anticompetitive effects, within and across countries, captured by vested interests and the opportunity cost of public funds, which economists have pointed out, based on previous unsuccessful experiences. In this paper, we contribute to the debate on industrial policy by presenting both a sound and simple framework to help design industrial policies and also data that allow the comparison of industrial strategies and their priorities across countries. First, this paper summarises our recent framework for industrial strategies, which is designed to offer practical policy advice and shed light on the complementarities between different policy instruments. Such a framework is particularly useful when designing complex mission-oriented industrial strategies promoting the green transition of the business sector. Second, this paper presents some salient results from the new “Quantifying Industrial Strategies” (QuIS) project, which gathers harmonised data on industrial policy expenditures, policy priorities, and policy instruments, thereby allowing the benchmarking of industrial strategies across countries. Based on the aforementioned conceptual framework, QuIS measures industrial policy expenditures across 9 OECD members, for the period 2019–2021. The data, now publicly available on the OECD website, show the importance of industrial policy expenditures, and the growing role of green industrial policies in countries industrial strategies

Global Engagement and the Innovation Activities of Firms

Firms that export or, even more so, are part of a multinational enterprise tend to exhibit higher productivity than their purely domestic counterparts. To better understand this correlation, we incorporate the perspective of industrial organization that one of the main drivers of differences in productivity is differences in knowledge. We examine a new data set of several thousand U.K. enterprises covering all industries from 1994 through 2000. For each enterprise we have multiple detailed measures of knowledge outputs, knowledge investments, and sources of existing knowledge. We find that globally engaged firms do innovate more. But this is not just because globally engaged firms use more researchers. It is also because they learn more from more sources such as suppliers and customers, universities, and their intra-firm worldwide pool of information. We also find that the relative importance of knowledge sources varies systematically with the type of innovation.

Productivity Growth, Knowledge Flows and Spillovers

This paper explores the role of knowledge flows and TFP growth by using direct survey data on knowledge flows linked to firm-level TFP growth data. Our knowledge flow data correspond to the kind of information flows often argued, especially by policy-makers, as important, such as within the firm, or from suppliers, purchasers, universities and competitors. We examine three questions (a) What is the source of knowledge flows? (b) To what extent do such flows contribute to productivity growth? (c) Do such flows constitute a spillover flow of free knowledge? Our evidence show that the main sources of knowledge are competitors; suppliers; plants that belong to the same group and universities. We conclude that the main "free" information flow spillover is from competitors and that multi-national presence may be a proximate source of this spillover.business services, structural change, economic growth, productivity

Multinationals, foreign ownership and US productivity leadership: Evidence from the UK

Several studies using firm level data find that foreign-owned firms are more productive than domestic ones. This could reflect a foreign advantage or an omitted variable bias: foreign firms are by definition multinational enterprises (MNEs), and MNEs are typically more productive than non-MNEs. This paper attempts to discriminate between these hypotheses. We are the first to study the productivity of foreign owned firms relative to UK firms separated into MNEs and non-MNEs. We obtain three main results. First, the foreign productivity advantage is mostly a multinational advantage: MNEs, foreign and UK, are more productive than non-MNEs. Second, US owned firms maintain a productivity advantage with respect to both UK and other foreign owned firms. Third, examining the longitudinal dimension of our data we find no evidence that higher MNE productivity is driven by sharing superior firm specific knowledge among affiliated plants. Thus, the MNE advantage must lie in an ability to takeover already productive plants or in setting up above average productivity plants on green field.Multinational Firms, Productivity, Foreign Ownership, US leadership, Double Fixed-Effects