chapter  5
Outward orientation: a firm-level analysis
Pages 26

In this chapter we conduct an analysis of export competitiveness at the firm level. Prior to conducting the analysis, it is necessary to ask what would be the relevant definition of ‘export competitiveness’ (or equivalently, ‘international competitiveness’) at the level of the firm. As we have seen in the previous chapter, ‘international competitiveness’ for an industry is conventionally defined to be the share of the industry’s product in the total world exports of that product. Clearly, such a definition is not meaningful at the firm level as the use of world total exports as the denominator for calculating the firm’s export share would yield quite insensible results. A more feasible definition is to calculate the firm’s export share using total exports of the industry in which the firm is located in as the appropriate denominator. However, such a measure may provide biased estimates of the firm’s export competitiveness if the firm is gaining export share in an industry which itself is losing export markets. In this case, it is debatable whether the increase in the share of the firm in total industry exports can be termed as an increase in the firm’s export competitiveness. Rather than defining export competitiveness as a gain in export shares, we take the very act of exporting by a firm as a measure of the firm’s ability to compete in export markets. That is, we take the firm’s export status as a measure of the firm’s export competitiveness.