Discussion Paper 8
Export performance and increased services content in EU manufacturing
Yvonne Wolfmayr, Österreichisches Institut für Wirtschaftsforschung, Austrian Institute of Economic Research (WIFO), Vienna, Austria
Against the background of the increasing services content of many manufactured goods, the paper attempts to assess the role of (domestically and internationally) purchased services for the relative export performance of countries in a particular manufacturing industry. It estimates an empirical model of export market shares for EU15 countries and 12 disaggregated manufacturing industries over the period 1995 to 2007. Whereas most traditional explanations are based on the influence of relative costs and technology-related variables, this paper emphasises the importance of services as a determinant of both product quality and the sectors' productivity. The service linkage variables are based on national Input-Output-Tables. The analysis finds a positive and highly significant impact of services on export market shares of manufactured goods. Distinguishing between domestically-sourced service inputs and imports results in a robust and highly significant impact of international service linkages, while the analysis finds no impact of domestic service linkages.
A version of this paper has been published in the National Institute Economic Review, April 2012.