Irish Enterprise Exporting Patterns in Goods
and Services
Martina Lawless, Iulia Siedschlag
and Zuzanna Studnicka
4th April 2017
www.esri.ie
Research funded by Enterprise Ireland and
the Department of Jobs, Enterprise and Innovation
Introduction




Two reports:
 “Expanding and Diversifying the Manufactured Exports of
Irish-Owned Enterprises”
 “Services Exports and Exporters of Services”
Parts of research programme on “Exports, Innovation and
Productivity”
 Funded by Enterprise Ireland and the Department of Jobs,
Enterprise and Innovation
Exports of both manufactured products and services are a
major driver of Irish economic growth of the 1990s and
2000s.
Dominant role played by multinationals (close to ninety
percent of total manufactured exports).
Expanding and Diversifying the
Manufactured Exports of Irish-Owned
Enterprises
Introduction


We investigate how firms launch, adapt, diversify
and grow their exports.
We disentangle between growth coming from:






Entering new market destinations,
Launching new products,
Growing existing markets and/or products,
Combinations of all of these elements.
Insight into the opportunities, risks and challenges of
operating on the global marketplace.
Focus on domestically owned exporters.
Research questions






How concentrated are Irish-owned manufacturing enterprises
currently in terms of products and destination markets?
How flexible are they in moving from declining to expanding
destination markets?
How dynamic are they in changing export products?
Is the current concentration in products and destinations with
future growth opportunities?
What mix of export growth strategies do successful
manufacturing enterprises use and what are the sequences of
steps in their successful export growth?
Do existing (long-standing) exporters have different exporting
strategies compared to new exporters?
Data sources
We merge two key sources of manufacturing firm activity:
1. Trade data (IntraStat and ExtraStat)
 Highly detailed transaction level records
 Very finely defined products (HS 6-digit level)
 Firm values of exported products to each destination
market
 Limitation – does not cover firms exporting values below
€635,000
 This excludes many firms but not much total trade
2. Census of Industrial Production
 Firm information on characteristics such as employment,
ownership etc.

Data sources




Between 1,000 and 1,400 firms per year.
20-year horizon (1996-2015).
47 per cent of firms, 99 per cent of total trade.
We distinguish between:



Irish and foreign-owned companies,
Small, medium and large companies,
Firms exporting: food products, non-food products, both.
%
Small
Medium
Large
All
Food
Firm size distribution and
average employment
Both
Non-food
57
32
11
Irish
61
24
5
Non-Irish
30
46
23
All firms
Irish
Non-Irish
119.3
75.7
232.3
103.2
75.1
72.1
153.0
61.9
210.2
124.1
404.6
180.7
Most exporters sell a few products...
Distribution of Products





Average number of products
exported by an Irish owned
firm in 2015 was 8.1.
Median of 4 in 2015.
Half of Irish-owned firms
export fewer than five
products.
Foreign firms – average of 19
products, median of 11.
Non-food firms more
diversified than food firms, but
firms exporting both had
highest product counts.
...To a small number of markets
Distribution of Markets





Exporters sell into an average
of 7.7 destinations (2015).
Median of 3 markets.
Foreign owned firms sell to on
average 17.7 destinations and
median of 12.
Non-food firms sell to slightly
more markets (average of 6.9)
compared to food firms (4.2).
Firms selling food and nonfood have highest market
coverage (average 14.7).
Joint Product & Destination Dimensions
Distribution of Firms by Product and Market – Irish Firms
2011-15
1 Market
1
Number of Products
2
3-5
6-10
11-20
20+
Total
16.93
3.90
3.51
1.64
0.86
0.08
26.91
2 Markets
1.09
3.98
5.07
2.03
1.25
0.39
13.81
3-5 Markets
0.70
0.94
5.07
5.62
3.28
2.26
17.86
6-10 Markets
0.31
0.47
2.18
4.21
3.43
3.35
13.96
11-20 Markets
0.00
0.16
0.86
2.89
4.06
4.76
12.71
20+ Markets
0.00
0.08
0.00
0.78
2.89
11.0
14.74
19.03
9.52
16.69
17.16
15.76
21.84
100
Total
Joint Product & Destination Dimensions
Export value by product and market – Irish firms
Number of Products
2011-15
1
2
3-5
6-10
11-20
20+
Total
1 Market
1.38
0.34
0.43
1.21
0.22
0.00
3.58
2 Markets
0.02
0.31
1.18
0.18
0.33
0.05
2.07
3-5 Markets
1.23
0.09
0.98
1.09
0.78
1.51
5.70
6-10 Markets
0.33
0.30
0.93
3.95
1.18
1.44
8.14
11-20 Markets
0.00
0.01
1.02
2.46
11.45
5.76
20.68
20+ Markets
0.00
0.37
0.00
3.83
9.17
46.46
59.84
Total
2.96
1.42
4.54
12.72
23.14
55.23
100
Importance of food
Food and non-food exports by Irish firms
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1996
1998
2000
2002
2004
Irish Non-Food
2006
2008
Irish Food
2010
2012
2014
Top food products
Top exported food products by Irish firms
HS-6
% Share of
product in
total Irish
Food
Exports
% Irish
Market
Share in
Product
World
Exports
% Growth
of Irish
Export
Sales
2011-14
20130
23.3
8.32(-)
3.8
40690
4.4
0.9(+)
23.0
40510
4.0
3.78(-)
3.2
160250
3.4
7.42(-)
-0.2
20610
2.8
24.62(-)
-8.9
230910
2.7
1.23(-)
-1.5
20110
2.5
5.69(+)
6.1
190190
2.4
2.0(-)
-18.4
20230
2.3
0.53(-)
5.7
20329
2.1
0.9(+)
16.1
Total
50
Product name
Bovine Meat – Boneless: Processed & Other
Other Cheese: Cheddar Cheese, Colby
Butter
Meat, Offal Meat, Blood of Bovine Animals
(Prepared or Preserved)
Edible Offal of Bovine Animals, Fresh or
Chilled of Bovine Animals, Frozen
Dog or Cat Food, Put up for Retail Sale
Carcasses and Half-carcasses, Veal, Other
Other Food Preparations of Malt Extract,
Flour, Starch, Milk, Cream
Bovine animals – Boneless, Processed
Meat of Swine (Frozen) – Processed & Other
Top non-food products
Top exported non-food products by Irish firms
HS-6
% Share
of
product in
total Irish
Non-Food
Exports
% Irish
Market
Share in
Product
World
Exports
350110
4.90
14.32(-)
300490
4.50
0.15(+)
842720
853110
852530
330690
390950
440710
330610
2.80
2.70
2.60
1.90
1.90
1.70
1.70
1.17(+)
2.02(+)
0(-)
6.67(-)
1.11(+)
0.37(+)
2.98(-)
841221
1.70
1.46(+)
Total
26
%
Growth
of Irish
Export
Sales
201114
Product name
-2.1 Casein
1413.9 Other Medicaments (Put up in Packings for Retail Sale)
53.3
517.7
new
-20.4
34.6
11.7
-24.9
Other Self-Propelled Trucks
Burglar or Fire Alarms and Similar Apparatus
Television Cameras
Preparations for Oral or Dental Hygiene
Polyurethanes
Coniferous
Dentifrices
24.4 Hydraulic Power Engines and Motors, Linear Acting
Top non-food products
Top exported products by foreign firms
Product name (HS-6)
% Average share
2011-2015
1
2
3
4
5
Medicaments containing hormones, packaged
Heterocyclic compounds
Vaccines for human medicine
Nucleic or other heterocyclic compounds
Compounds containing an unfused pyridine ring
6
Other hormones and their derivatives; other steroids
4.15
7
8
9
Sulphonamides
Other heterocyclic compounds
Spectacle lenses not made of glass
3.91
2.72
2.44
10
Compounds containing a quinoline or isoquinoline ring
2.21
Total
12.50
7.11
5.21
5.00
4.29
49.52
Destination markets
Top destination markets
Non-Food
% Share of
Irish Non-Food
Exports
1 United Kingdom 41.5
2
3
4
5
6
7
8
9
10
11
12
13
14
15
US
Germany
France
Italy
Netherlands
Belgium
Japan
Spain
China
Poland
Australia
Sweden
Canada
Russia
12.7
9.3
4.8
3.4
3.2
1.8
1.8
1.6
1.5
1.4
1.1
1
0.8
0.8
Food
% Share of
Irish Food
Exports
% Average
GDP growth
2011-14
% Average
GDP growth
2011-14
2.04
United Kingdom 49
2.04
2.11
1.47
0.77
-1.12
0.27
0.82
0.70
-1.00
7.74
2.74
2.70
1.47
2.30
2.37
France
Netherlands
Germany
Italy
Sweden
Spain
China
Belgium
Denmark
Nigeria
US
Russia
Japan
Switzerland
0.77
0.27
1.47
-1.12
1.47
-1.00
7.74
0.82
0.27
5.08
2.11
2.37
0.70
1.63
9.8
7.1
5.2
4.6
3
2.8
2.2
2
1.9
1.3
1.1
0.9
0.7
0.7
Irish firm exports and world demand
growth
Food products
25.0
Bovine meat –
boneless
Share of Irish food
20.0
15.0
10.0
5.0
Veal
Sablefish
0.0
-5.00
0.00
5.00
10.00
World growth
15.00
20.00
Irish firm exports and world demand
growth
Non-food products
6.00
Share of Irish non-food
5.00
4.00
Packaged
medicine
Casein
3.00
2.00
Fibreboard
-30.00
-20.00
Hides 1.00
Co-polymers
Cement0.00
-10.00
0.00
10.00
World growth
Milk albumin
20.00
30.00
40.00
Key messages – part 1






Most exporting firms sell a few products to a few destinations.
In contrast, export values are dominated by a relatively small
group of export “superstars”.
11% of highly globalised Irish firms (exporting more than 20
products to over 20 destinations) account for 46% of exports.
Policy perspective: High levels of specialisation in the right
products and markets may be a positive strategy for growth.
But concentration also brings risk (importance of the UK).
On-going monitoring of global trends is required to keep ahead
of market developments and be ready to exploit new
opportunities.
Results suggest a need for on-going support to facilitate export
expansion as well as entry.
Exporting risky – lots of early exits
Survival probability by firm size
Constant product dynamics...
Firms Changing Product Mix – Number of Firms
Irish
Adding
Non-Irish
Dropping
1-Year
Continue
Adding
Dropping
1-Year
Continue
2005
351
393
645
602
287
327
421
410
2006
369
391
651
570
259
318
392
368
2007
335
402
669
578
257
283
366
337
2008
342
314
555
591
231
244
307
362
2009
404
322
601
609
269
232
344
344
2010
398
331
637
651
255
257
344
360
2011
434
399
727
655
249
270
355
342
2012
450
381
678
697
246
253
330
366
2013
433
408
689
732
237
263
338
355
2014
410
427
674
747
224
244
326
343
2015
742
838
330
357
New products can be very short-lived
Product Survival Rates by Size (Percentage of Irish Firms)
Even for experienced exporters
Product Survival by Years of Export Experience (Percentage of Irish Firms)
Similar dynamics for new markets…
Number of Firms Changing Destinations
Enters
Irish
Exits
1-Year
Continue
Enters
Non-Irish
Exits
1-Year
Continue
2005
293
314
405
580
238
265
289
392
2006
313
343
433
549
208
265
260
356
2007
311
321
433
547
201
242
269
325
2008
297
284
358
559
202
198
217
342
2009
368
269
405
579
222
204
250
326
2010
383
241
448
611
237
189
247
339
2011
430
303
505
623
220
225
255
321
2012
400
330
480
681
216
207
257
345
2013
411
352
491
697
202
233
233
335
2014
405
356
497
723
194
228
228
320
2015
576
784
264
324
Similar dynamics for new markets…
Destination Survival Rates by Size (Percentage of Irish Firms)
Even for experienced exporters
Destination Survival by Years of Export Experience (Percentage of Irish Firms)
Export levels mainly due to
established products and destinations
Regression Decomposition of Irish Firms’ Exports into
Extensive and Intensive Margins
All Exporters
Share
Number of products
0.178***
Average exports per product
0.822***
Number of destinations
0.153***
Average exports per destination
0.847***
Shows total exports divided into percentage contributions of extensive
margins (number of products and destinations) and intensive margin
(average sales) using regression analysis.
But growth driven by entry & exit
Percentage Contributions to Export Growth (Average 1996-2015)
Irish
Foreign
Total Growth
Continuers
Firm Changes
0.068
0.038
0.066
0.069
Product Changes
0.068
0.031
0.066
0.051
Irish
Foreign
Destination Changes
0.068
0.038
0.066
0.055
Irish
Foreign
Entry
Exit
0.048
0.027
-0.018
-0.030
0.093
0.071
-0.055
-0.056
0.079
0.056
-0.048
-0.046
Young exporters grow particularly rapidly
Percentage Contributions to Export Growth (Average 1996-2015)
Total Growth
Experience 1-5 years
Experience 6-10 years
Experience >10 years
Experience 1-5 years
Experience 6-10 years
Experience >10 years
Continuers
Product Changes
0.251
-0.135
-0.068
-0.060
0.035
0.052
Destination Changes
0.251
-0.151
-0.068
-0.033
0.035
0.064
Entry
Exit
0.475
0.028
0.033
-0.089
-0.036
-0.050
0.465
0.024
0.023
-0.063
-0.060
-0.053
Key messages – part 2






Exporting is risky.
Continuing exporters are very dynamic -frequently introduce
new products, drop products and enter and exit markets.
Exports sales dominated by existing product-market
combinations.
However, growth is largely driven by entry of new firms and
movement of exporters into new products and new markets.
Demonstrates importance of on-going support for firms
taking risks moving into new product and market areas.
Support for innovation and ongoing adjustment and
experimentation is a key policy takeaway for success of
exporting firms
Services Exports and Exporters of Services
Introduction



International trade in services has been the fastest
growing component of international trade
(representing 21 per cent of world trade in goods
and services in 2014).
Services formed approximately 40 per cent of total
Irish exports in 2015.
Limited level of detail available in any country on
services trade flows and the activities of firms
exporting services.
Research questions





How important is Irish trade in services?
What are the participation rates of services firms in
exporting?
How concentrated is trade in services?
What are the most important sectors?
Differences between exporters and non exporters?
Data source




Firm-level data collected through the Annual Services Inquiry
(ASI) to examine the participation of non-financial services
firms in exporting.
The ASI is based on a census of firms with 20 and more
persons and a stratified random sample for firms with less
than 20 persons.
The latest available information from the CSO indicates that
about 18,000 firms were covered by the ASI.
Studied period 2008-2012.
Definition of trade in services
The General Agreement on Trade in Services (GATS) describes
four modes through which services may be traded:




Mode 1: Cross-border supply – the supplier in one country delivers a
service to a customer in another country remotely (e.g. via e-mail,
telephone) without either supplier or customer moving location.
Mode 2: Consumption abroad – the customer travels to the country in
which the supplier is located in order to avail of the service (e.g. tourism
exports).
Mode 3: Commercial presence – firms supply services in another country
through the presence of an affiliate in that country.
Mode 4: Presence of natural persons – the supplier travels to the country
in which the customer is located in order to supply the service (e.g.
business consultancy).
CSO uses this definition excluding Mode 3
Exporting is rarer in services than in
goods…
Shares of firms by year
Year
2008
% Share of
exporters
1.7
% Share of
serv. exp.
33.3
% Share of
goods exp.
60.8
% Share of
both exp.
5.9
2009
2.0
33.1
60.3
6.6
2010
2.2
39.5
49.9
10.6
2011
2.1
38.6
50.5
10.8
2012
2.3
41.0
45.4
13.6
And dominated by foreign firms
Total exports of services (€000s)
Year
Total
Foreign
Irish
% Share
foreign
% Share
Irish
2008
16,794,603
13,132,846
3,661,757
78
22
2009
15,933,875
13,970,620
1,963,255
88
12
2010
34,753,887
31,528,385
3,225,501
91
9
2011
38,480,595
35,944,191
2,530,913
93
7
2012
47,106,117
43,545,699
3,560,418
92
8
What do they export?
Average Share of Services in Firm Exports (2008-2012)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2008
2009
2010
2011
2012
2008
All Sectors
2009
2010
2011
Excluding retail/wholesale
Foreign
Irish
2012
Exports are highly concentrated…
Total exports by sector, all firms (2008-2012)
Nace
2
58 &
62
Description
%
Share
of
firms
Total
exports
(€000s)
% Share
in total
exports
% Share
of exp. in
sales
Av.
Exports
by firm
(€000s)
4.5 20,342,938
47.43%
71.26
5,446
8.1 11,762,272
27.43%
19.98
1,734
46
Publishing activities and
computer programming
Wholesale trade, except of
motor vehicles
63
Information service activities
0.1
5,928,689
13.82%
76.94
50,031
51
Air transport
Scientific research and
development
0.0
579,049
1.35%
11.43
24,905
0.2
534,113
1.25%
69.70
2,915
0.67
15
72
Total
47
12.9
Retail trade, except of motor
vehicles
17.6
91.28%
224,255
0.52%
But less amongst Irish firms
Exports by sector: Irish
Nace
2
Description
Exports by sector: foreign
%
Share
of
firms
%
Share
in total
exports
46
Wholesale trade, except
of motor vehicles and
motorcycles
7.7
33.52
58 &
62
Publishing activities and
computer programming
4.3
21.19
51
Air transport
0.0
7.52
72
Scientific research and
development
0.2
5.80
52
Warehousing and
support activities for
transportation
0.7
69
Legal and accounting
activities
Total
Nace
2
Description
%
%
Share Share in
of
total
firms exports
58 & Publishing activities and
62
computer programming
11.81
51.94
46
Wholesale trade, except
of motor vehicles and
motorcycles
28.94
26.38
63
Information service
activities
0.46
16.11
4.85
71
Architectural and
engineering activities
3.73
1.10
7.0
4.60
61
Telecommunications
0.84
0.71
19.9
77.5
Total
45.8
96.2
Importance of online sales
Summary statistics for online sales (€000s)
Year
2008 Av. % share online
Av. online sales
2009 Av. % share online
Av. online sales
Number of firms
2010 Av. % share online
Av. online sales
2011 Av. % share online
Av. online sales
2012 Av. % share online
Av. online sales
sales
sales
sales
sales
sales
Ownership
Foreign
Irish
17
6
10,717
1,298
14
4
27,992
1,024
2,901
121,736
14
4
31,181
1,520
13
4
24,108
1,182
14
4
14,069
2,004
Exporter of services
Non-Exporter
Exporter
6
18
1,456
18,002
4
19
2,097
27,164
123,627
1,010
4
22
1,977
52,429
4
24
1,721
37,485
4
27
2,373
19,019
Exporters outperform non-exporters
Export premia
Employment
All
Irish
Foreign
21%***
26.5%***
6.9%
All
Irish
Foreign
17.5%***
24.3%***
12.5%***
Productivity
Wages
Sales
Exporters
8.6%***
14.1%***
8.6%***
9.4%***
17.4%***
9.4%***
7.9
2.4%
15.1%**
Exporters of services
13.1%***
15.7%***
13.1%***
8.5%***
16.6%***
8.5%***
18.2%***
9.9%***
18.2%***
Online
sales
Investment
37.1%***
48.7%***
9.2%
6%
9.8%
44.9%***
40%***
29%***
55.4%***
6.9%
0.8%
13.6%
Key messages




The lower participation rate in exporting suggests higher
obstacles to becoming an exporter exists in the services area.
Some, but not all, of this can be explained by the nontradable nature of some sub-sectors.
Exports of services are dominated by foreign-owned firms.
Large differences in export activity and intensity between
Irish and foreign firms suggests that greater international
engagement by indigenous firms is not impossible.
Key messages



In terms of the shares of exports accounted for by different
sectors within services, publishing activities and computer
programming dominate services exports when calculated for
all firms.
However, exports are less concentrated in the top few sectors
amongst Irish firms.
Expansion of the client base plays a much larger role in firm
export growth for services firms than it does for goods
exporters.