Transcript Diapositiva 1

The Crisis, External Imbalances
and
Competitiveness in the Euro Area
Giorgio Barba Navaretti,
University of Milan
and
Centro Studi Luca d’Agliano
LAC-EU Economic Forum 2013
Santiago, January 21st 2013
EU growth, competitiveness and
current account imbalances
Capital inflows in the right direction, but
not to the best use
GDP per capita (relative to EA) in 1999 (LHS)
GDP per capita (relative to EA) in 2010 (LHS)
Current account deficit (% GDP), average 1999-10 (RHS)
160
12
140
6
120
100
0
80
-6
60
-12
40
20
-18
EE
2
SK
SI
MT
PT
GR
CY
ES
EA
FI
FR
IT
DE
BE
Sources: EC and Eurostat.
Notes: Countries are ranked according to GDP per capita in 1999. GDP per capita, relative to the EA, in PPS.
IE
NL
AT
External imbalances:
Things change
Source: Barues, Lawson, Radziwill and Lane, OECD WP
External Imbalances:
Forecast of Decline in the Periphery
Source: IMF, WEO, October2012
Macro Macro and then??
Debate on “competitiveness”: macro indicators
•Real Effective Exchange Rates (REER)
•Unit Labor Costs (ULC)
•Export shares
•Current Account (in % of GDP)
Correcting External Imbalances:
Is Deflation Enough?
INDUSTRY?
Source: IMF, WEO, October2012
Sectors?
Manufacturing Trade Balance/GDP (%)
12
Others
10
Furniture
8
Other Transport Equipment
6
Vehicles
4
Machinery
2
Electrical & Optical Products
0
Metal Products
-2
Chemicals, Pharma, Plastic
-4
Wood, Paper, Print
-6
Textile and Leather
Food, Beverages, Tobacco
-8
Manufacturing TB/GDP
-10
France
Germany
Italy
Greece
Spain
Turkey
Source: OECD and IMF. Data for 2011, except Spain 2010
And micro?
BUT
Firms?
Nations and sectors do not produce,
do not trade, do not compete; it is
firms that produce trade and
compete.
Average firm size
What do we learn when we look at firms?
THE EFIGE SECOND POLICY POLICY REPORT
• Differences in country patterns:
• German and French more sophisticated internationalisers
• Spain and Hungary lagging behind
• Italians, higher export propensity
• Firms characteristics affect internationalisation patterns in
a remarkably similar way across countries
• Patterns explained mostly by firm characteristics
Country differ because they have a different industrial
structure
Number of Destinations of Exports
Many Firms in Few Countries, Few Firms in Many Countries
1
0.9
0.8
Share of Exporters
0.7
AUT
0.6
FRA
Policy: How to shift these
distributions to the right?
0.5
GER
HUN
0.4
ITA
SPA
0.3
UK
0.2
0.1
0
0
10
20
30
No. of destinations (more than)
40
più di 50
Global Operations and TFP
Watch Out for the Causality Link
Perspective: higher moments = reallocation of resources
Source: Altomonte, Aquilante, and Ottaviano (2012)
Global Operations and TFP
Three steps
1. Identify thresholds
2. Identify firms moving above thresholds
3. Identify features of firms moving above thresholds
Source: Altomonte, Aquilante, and Ottaviano (2012)
What it takes to move up
1. Higher ex ante productivity
2. More human capital
3. No family managers
4. Less leverage
5. Foreign groups
IMPACT ON TOTAL EFFICIENCY AND TRADE DEPENDS ON
BUT
REALLOCATIVE EFFECTS
Implications
•
Industrial structure (distribution of firm characteristics) important for trade
imbalances
•
Caveat: export not necessarily Nirvana
•
=> But clearly export competitiveness reflects efficiency and growth of
industry and viceversa
•
German miracle: did Germany have an industrial structure able to respond to
changes in incentives??
• = > Mittelstandt ? Fraunhofer?
• For other countries is firms growth important (Italy)?
•
Nothing can be forced, but impediments to growth? And does reallocation of
resources favour productivity growth?
•
Finally what about industrial policy??
The Happy Few
Exports Very Concentrated
Share of Total Exports for Top Exporters, by Country
Country
FRA
GER
ITA
SPA
Top 1%
48,9
22,9
50,4
27,1
Top 5% Top 10% Top 20%
75,8
85,7
93,1
52,8
68,8
82,9
69,7
78,1
86,8
65,2
78,5
89,0
What Explains Export Status?
Firms’ Features
100%
Firm Characteristics
90%
Sector Effects
80%
Country Effects
70%
64%
60%
50%
40%
30%
20%
29%
10%
0%
7%
A Simple Decomposition
•
To quantify the importance of size and sector, apply to ITA, FRA and
SPA the German structure (Germany only as benchmark; no
suggestion to become German!)
•
Keep fixed a country’s total employment in the manufacturing
sector and shift workers across firms and sectors to replicate
German structure
•
How? Changing the weighting scheme as if sample firms in ITA, FRA
and SPA were drawn from German population
•
Importantly, keep a country’s export propensity and export share by
size and sector classes
Export rise if we apply German industrial
strucure, more in Italy and Spain than in France
(Number of workers constant)
Italy:
Most of the
action is
size
France and
Spain,
industry
matters
most
Switchers and the rest
2001/2 vs 2008/9
Source: Altomonte, Aquilante, and Ottaviano (2012)