WORKSHOP ON TEACHING
AND RESEARCH OF TRADE AND POVERTY:
Conceptual and Methodological approaches
and Policy Implications
Peacock, Hotel, Dar-es-Salaam, Tanzania,
19-23 November 2007
Manufacturing Export Performance,
Macro-economic Adjustment
and the Role of Networks
By
Takawira Mumvuma
Economics Department
University of Zimbabwe
IMPORTANCE OF STUDY
•
The objective of this study was to assess the extent of changes in
exporting patterns over time, by sector and by destination;
•
Understanding these firm level export responses was crucial to the
evaluation of the success or failure of the policy reforms; and
•
In particular focusing on firm level characteristics and networks allowed the
study to capture the great variation among firms in responses to the new
economic environment.
2
DATA CHOICE & DATA ANALYSIS METHODS
•
The firm level data are suitable to study the impact of liberalization on firm
export performance and do some descriptive and econometrics analysis
using this micro level data;
•
In our regression analysis the logit and tobit models were preferred because
our censored regression models could be estimated directly using the
maximum likelihood approach-the so called two-step estimation procedure;
•
This procedure is the most preferable if in the model to be estimated there
are some variables that affect the chance of being an exporter for example,
differently from the percentage of output exported. The network variables
are good example in this case; and
•
Also traditional ordinary least squares analysis of censored data gives
biased estimator (s)
3
MAIN RESEARCH FINDINGS
TRADE PATTERNS BASED ON THE FIRM LEVEL DESCRIPTIVE DATA
MOVEMENTS IN EXPORTED VALUE 1991-1995
4
MOVEMENTS IN EXPORTED VALUE 1991-1995
•
Initially after a decline in 1992, and a slight recovery in 1993, exports
pick up in 1994 and 1995;
•
Between 1991 and 1995 the index for all firms increased from 100 to
145 in 1995, implying an average annual firm level increase in
exported value in real terms of 7.7%;
•
The value exported by small firms (those employing up to 100
employees) increases most rapidly: it tripled between 1991 and
1995;
•
For large firms (those employing more than 100 employees) it
increased by approximately 6.4% each year;
•
What is important to note is the fact that the most important
contribution to Zimbabwe’s export receipts is generated by the large
firms since the total value exported by these firms is about 50 to 60
times as much as that of the small firms.
5
FIRM TRANSITION RATES IN THE EXPORT
MARKET 1991-1995
6
FIRM TRANSITION RATES IN THE EXPORT
MARKET 1991-1995
•
On average, each year 3% of the non-exporting firms becomes an exporter while
2% of the exporting firms ceased exporting the following year;
•
However, most firms (87%) did not change their exporting status between 1991
and 1995: 77% remained non-exporters, 10% continued to be an exporting firm
and 13% made at least one switch;
•
Of interest are the transition figures for 1993-1994-they show that a substantial
number of non-exporting firms became exporters (6.8%), while very few exporting
firms (less than 1%) stopped being exporters the next year;
•
The implication is that that during this period Zimbabwean firms easily switched in
and out of exporting, a process that could also have been hastened by the firms’
survival motive;
•
It can also be concluded that the large number of small and large firms that made
the transition to exporting in 1993-1994 and the relatively small number of firms
that quit exporting, is a sign that Zimbabwean firms have no problems in breaking
into export markets and remain there.
7
PERCENTAGE OF OUTPUT EXPORTED 1991-1995
8
PERCENTAGE OF OUTPUT EXPORTED 1991-1995
•
In terms of the actual proportion of output which is exported; on average
firms export less than 2% of their output;
•
Large differences between small and large firms again exist. Whilst the
percentage exported by small firms declined until 1995 in which year it
nearly doubles, that of large firms increased steadily from year to year
•
Most firms do not export at all, so that on average only 2% of output is
sold on foreign markets;
•
Exporting firms sell approximately 15% of their output abroad with a clear
variance between small and large firms;
•
Whilst small exporting firms sell about 12% of their output abroad, large
firms sell more than a quarter of their production.
9
PERCENTAGE OF FIRMS EXPORTING
BY SECTOR 1991-1995
10
PERCENTAGE OF FIRMS EXPORTING
BY SECTOR 1991-1995
•
Indications are that at the sectoral level, firms were responsive to the
changes in the relative prices in favor of exports;
•
The wood and textile sub-sectors are remarkable in this respect, as the
percentage of textile firms exporting doubled while the percentage of wood
firms exporting more than tripled between 1991 and 1995;
•
Although the percentage of exporting firms is still the lowest in the wood subsector, the wood firms that do export are generally large firms;
•
At the same time, for all sectors it is true that a larger proportion of the large
firms are exporters than of the small firms.
11
LINK BETWEEN NETWORKS AND THE
PERCENTAGE OF OUTPUT EXPORTED
•
Statistical results shows that firms which are partly or wholly foreign owned export
a larger fraction of their output: on average 3.2% between 1993 and 1995 against
1.5% for firms with Zimbabwean owners only;
•
This also holds for firms that are a subsidiary of a multinational corporation. They
export 5.9% on average against 1.2% for other firms.
12
ETHNIC DISTRIBUTION OF FIRM OWNERSHIP
AND DESTINATION OF EXPORTS
13
ETHNIC DISTRIBUTION OF FIRM OWNERSHIP
AND DESTINATION OF EXPORTS
•
Cultural background may serve as a network variable and indeed results
in the table above seems to confirm this;
•
It is true that European owners are more internationally oriented and
export especially to white-dominated markets of Europe, the United
States and South Africa;
•
That it is easier to trade with people of a similar cultural background is
confirmed by the fact that African owners specialize in trading with
customers in other African countries;
•
But Asians are found not to export to Asia, while they are overrepresented in exports to Europe and the United States. Why is this so?
14
DETERMINANTS OF EXPORT PERFORMANCE IN
THE MANUFACTURING SECTOR:
RESULTS BASED ON REGRESSION ANALYSIS
Tobit regression results based on the decision to export and output exported
15
DETERMINANTS OF EXPORT PERFORMANCE IN
THE MANUFACTURING SECTOR:
RESULTS BASED ON REGRESSION ANALYSIS
Logit regression on whether a firm exports within the region or to the world market
16
LIMITATIONS OF THE STUDY AND AREAS
FOR FURTHER RESEARCH
•
A major weakness of the study was its emphasis on the quantitative
determinants of export performance at the expense of some important qualitative
explanation of the modest export supply response registered during the reform
period;
•
In terms of research this calls for detailed micro level case studies in order to
capture this more qualitative determinants of firm level export performance;
•
From a policy perspective, it may also be interesting to investigate the
complementary policy measures that may be most effective in dealing with the
problem of uncertainty, including measures aimed at improving the government’s
credibility and support for trade policy reforms.
17