Young, small and export oriented: the Moroccan winners?
To get a clearer idea of the export orientation of Moroccan firms, we report some firm-level statistics that shed light on whether exporter, non-exporter and irregular exporter firms differ in their underlying characteristics. In our sample, a fairly small proportion of firms (23 per cent) are classified as exporter, which we define as having a ratio of total export / total sales always greater than zero for every year in the sample. Moreover, the vast majority of these establishments export a large fraction of total sales. On average, 73 per cent of exporters report an export ratio greater than 60 per cent of total sales. Fifty-seven per cent of firms sell only to the domestic market and are defined as non-exporters. The remaining 20 per cent compete on the international market irregularly (Figure 7.1). The firms’ distribution across the three export categories is quite stable across the sample. Concomitant with this, in Figure 7.2 we see that the exporter firms typically employ significantly more workers than do non-exporters with the firms that changed their status falling in between. Over the period the average firm size is fairly constant across the three categories. The larger size of exporting firms is not surprising. But, as suggested by Bernard and Jensen (1999), the question is whether good firms become exporters or whether exporting improves firm performance. Hence, the larger size of exporter firms could be explained in two ways. First, to compete in the international market, firms need to be reliable, competitive, have easy access to credit and an efficient organisation. This is particularly true of large firms, especially in developing countries. Second, trade liberalization increases competition and forces firms to lower price-marginal cost and hence move down their average cost curves, thereby raising firm size and scale efficiency. These two explanations suggest that the larger size of exporters
could arise from the trade reforms of the 1980s and 1990s or be an individual intrinsic characteristic. It is also worth noting that for each of the categories the standard deviations are usually about three times the size of the means. This, in turn, suggests that plant-level heterogeneity is quite large and that simply looking at means and aggregates may be misleading. Classifying firms on the basis of size, in Table 7.2 we create four categories: mini (or very small) firms (0-5 employees); small firms (5-15); medium firms (20-100); and large firms (>100). Looking at the firm distribution by size, the majority of the firms are classified as small (30 per cent) and very small (29 per
cent); medium firms account for the 35 per cent of the sample and large firms for 6 per cent. While large firms are quite stable across the period, small and very small firms increase their share. Exporting firms are more likely to be medium or large, while non-exporter firms are usually small and very small firms. Finally, looking at the age dimension (Table 7.3), the firm distribution is fairly homogeneous: 34 per cent of firms in our sample are less than three years old (young), 23 per cent are between three and ten years old (medium age) and 43 per cent are more than ten years old (old). Moreover, while the majority of non-exporter and irregular exporter firms are old, exporter firms are equally distributed across the three age groups. This pattern reflects the inward-oriented policy that characterised the Moroccan economy in the past. With regard to size, the majority of mini firms are young (41.31 per cent) and the larger ones are old (61.38 per cent). This result confirms the pattern of firm growth: new firms are usually small and they increase their size across their lives.