The granularity of Spanish exports

SERIEs, Jul 2017

Using data for all exporters, we show that it is a small group of firms that dominate exports in Spain. For example, in 2015 the top 200 firms were responsible for half of Spanish exports. This concentration has not changed substantially over the 1997–2015 period. The dominance of a few firms, a phenomenon denoted as granularity, also defines the specialization of Spanish exports. If top exporters disappeared, Spain would lose its revealed comparative advantage in 60% of industries, which account for 45% of all Spanish exports. Finally, granularity explains around one-third of the growth in Spanish exports.

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The granularity of Spanish exports

The granularity of Spanish exports Juan de Lucio 0 1 2 3 Raúl Mínguez 0 1 2 3 Asier Minondo 0 1 2 3 Francisco Requena 0 1 2 3 B Asier Minondo 0 1 2 3 Juan de Lucio 0 1 2 3 Raúl Mínguez 0 1 2 3 0 Instituto Complutense de Estudios Internacionales , Madrid , Spain 1 Deusto Business School, University of Deusto , Camino de Mundaiz 50, 20012 Donostia - San Sebastián , Spain 2 Universidad Nebrija, Calle de Santa Cruz de Marcenado , 27, 28015 Madrid , Spain 3 Department of Economic Structure, University of Valencia , Avda. dels Tarongers s/n, 46022 Valencia , Spain Using data for all exporters, we show that it is a small group of firms that dominate exports in Spain. For example, in 2015 the top 200 firms were responsible for half of Spanish exports. This concentration has not changed substantially over the 1997-2015 period. The dominance of a few firms, a phenomenon denoted as granularity, also defines the specialization of Spanish exports. If top exporters disappeared, Spain would lose its revealed comparative advantage in 60% of industries, which We would like to thank Francisco Olarte for preparing the SABI data used in the empirical analyses and Jordi Paniagua for his valuable suggestions and comments. We would also like to thank the Customs and Excise Department of the Spanish Revenue Agency (AEAT) for providing essential information for this paper. We gratefully acknowledge financial support from the Spanish Ministry of Economy and Competitiveness (MINECO ECO2015-68057-R and ECO2016-79650-P, co-financed with FEDER), the Basque Government Department of Education, Language Policy and Culture (IT885-16), and the Generalitat Valenciana (Prometeo II-2014-053). - account for 45% of all Spanish exports. Finally, granularity explains around one-third of the growth in Spanish exports. JEL F1 · F10 · F23 1 Introduction Exports are dominated by only a few firms. For example, the top 1% of exporters in Spain accounted for 72% of exports in 2015. As stated by Gabaix (2011) , these large firms, also known as superstars, are the incompressible grains of economic activity. If only a few firms account for most of the exports, they are likely to play an important role in shaping the countries’ export specialization and dynamics. In this paper, we use Spanish firm-level export data to investigate this pivotal role. We first show that exports are highly concentrated by firm, and this concentration has not changed substantially over the 1997–2015 period. We also document heterogeneity in export concentration across products. Second, superstars contribute substantially to trade specialization in many industries. If we removed the top 10 firms in each industry, Spain would lose its revealed comparative advantage in 60% of industries, which account for 45% of total exports. This result suggests that superstars, along with country-level fundamentals, play a very important role in determining Spain’s trade pattern. Finally, we show that superstars can explain around one-third of the variation in aggregate exports in Spain. This paper is related to the recent empirical literature analyzing the granularity of exports. In particular, it is related to the work by Freund and Pierola (2015) , who analyze the export concentration in 32 developing countries, investigating whether the countries’ trade patterns are defined by superstars.1 Our research adds to the literature analyzing the weight and role of top exporters in Spain, a major world exporter. Our analysis is relevant, since there are few studies that analyze the concentration of exports with a sample that includes all exporters. In addition to this, our analysis allows us to compare the role of top exporters when defining export specialization in developing countries, along with their role in developed countries. We also add to the literature showing that export concentration is stable over time and documenting that export flows, where a flow is defined as a particular 8-digit product shipped to a particular destination, are also concentrated by firm. We also report heterogeneity in export granularity across products, especially in more disaggregated classifications. Finally, we add to the literature measuring the idiosyncratic contribution of top firms to the variation of exports. In a broader sense, our research also relates to the literature that has introduced granularity into trade models (Eaton et al. 2012; Bernard et al. 2016) , and to the literature that has applied these models to estimate the role of fundamental and granular forces 1 Other papers, such as those by Canals et al. (2007), Mayer and Ottaviano (2008) , Bernard et al. (2009) and Marin et al. (2015) also document export concentration by firm. in shaping the comparative advantage (Gaubert and Itskhoki 2016) . Our research provides empirical support for this class of models. Finally, our paper is also related to the literature that has investigated how granularity might affect important (...truncated)


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Juan de Lucio, Raúl Mínguez, Asier Minondo, Francisco Requena. The granularity of Spanish exports, SERIEs, 2017, pp. 1-35, DOI: 10.1007/s13209-017-0157-x