Recent research

My most recent research papers:

2018:

2017:

2016:

2015:

2014:

2013:

2012:

(See below for abstracts and working paper versions of the papers)

A complete list of my recent research papers is available here.

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Abstracts:

Pass-on Trade: Why do Firms Simultaneously engage in Two-Way Trade in the Same Varieties?  (together with J. Konings and S. Polanec).

Review of World Economics, 149 (1): 85–111, 2013

This paper documents that a large fraction of trade flows at the firm level consists of simultaneous imports and exports in identical products, narrowly defined at the 8-digit product classification, which we call Pass-On Trade, POT. We use data on imports and exports at the firm–product level for Slovenian manufacturing firms in the period 1994-2008, to show that, on average, 70 percent of all exporting firms engage in POT. This corresponds to more than 50 percent of all exported products. Thus, imported products that are exported again by the same firm is a statistical regularity of trade of Slovenian manufacturing firms. We document that the use of POT is increasing in firm size, product diversification, multinational status as well as firm productivity and profitability. We offer and explore empirically a number of explanations for POT. Among possible explanations, we find evidence on the importance of firms’ multinational networks and demand complementarities between firms’ own and POT products.

A working paper version of the paper is available here.

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Spillover Effects of FDI with Heterogeneous Firms: Micro Evidence from Ten Transition Countries (together with M. Knell, B. Majcen and M. Rojec)

Journal of Comparative Economics, 41 (3): 895-922, 2013

This paper presents a comparative study of the importance of direct technology transfer and spillovers through FDI on a set of ten transition countries, using a common methodology and appropriate methods to account for selection and simultaneity correction. This paper considers by far the largest firm level dataset (more than 90,000 firms) used by any study on the spillover effects of FDI. The main novelty of the paper is the explicit control for various sources of firm heterogeneity when accounting for different effects of FDI on firm performance. Controlling for these variables leads to some interesting results, which contrast with the previous empirical work in the field. We find that horizontal spillovers have become increasingly important over the last decade, and they may even become more important than vertical spillovers. Furthermore, this work shows that the heterogeneity of firms in terms of absorptive capacity, size, productivity and technology levels affect the results. These findings suggest that both direct effects from foreign ownership as well as the spillovers from foreign firms substantially depend on the absorptive capacity and productivity level of individual firms. Only more productive firms and firms with higher absorptive capacities are able to both compete with foreign affiliates in the same sector and benefit from the increased upstream demand for intermediates generated by foreign affiliates. In addition, these results show that foreign presence may also affect smaller firms to a larger extent than larger firms, but this impact may be in either direction.

A working paper version of the paper is available here.

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Impact of Private Incidence of Corruption and Firm Ownership on Performance of Firms in Central and Eastern Europe (together with S. Blagojević)

Post-Communist Economies, 25 (2), June 2013

The paper investigates how efficiency of business environment and corruption (informal payments and state capture) affect the microeconomic performance of firms. The novelty of the paper is to look at these effects in the interaction with the firm ownership. We use firm-level micro data collected by the Business Environment and Enterprise Performance Survey (BEEPS) for 27 transition countries for the period 2002-2009. Among other data, BEEPS collects also information on different corruption activities at the firm-level and firm ownership. We estimate the impact of informal payments and state capture on firm productivity growth, whereby we control for firm ownership. We find somehow surprising results that private firms (domestic and foreign owned) are more involved both into informal payments as well as state capture activities. Our results also reveal that foreign owned firms that are involved in informal payments are likely to benefit from these corruption practices. On the other side, state owned firms are more likely to experience negative effects of involvements in corruption practices on productivity growth.

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Global Supply Chains at Work in Central and Eastern European Countries: Impact of FDI on export restructuring and productivity growth (together with Č. Kostevc and M. Rojec). Licos Discussion papers DP 332, March 2013.

This paper empirically accounts for the importance of the ‘global supply chains’ concept for export restructuring and productivity growth in Central and Eastern European Countries (CEECs) in the period 1995-2007. Using industry-level data and accounting for technology intensity, we show that FDI has significantly contributed to export restructuring in the CEECs. The effects of FDI are, however, heterogenous across countries. While more advanced core CEECs succeeded in boosting exports in higher-end technology industries, non-core CEECs stuck with export specialization in lower-end technology industries. This suggests that where FDI flows have been directed is of key importance. Our results show that export restructuring and economic specialization brought about by FDI during the last two decades in the CEECs might matter a lot for their potential for long-run productivity growth. Industries of higher-end technology intensity have experienced substantially higher productivity growth and so have countries more successful in attracting FDI to these industries.

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Growing lemons and cherries? Pre- and post-acquisition performance of foreign-acquired firms in new EU-member states (together with Črt Kostevc and Matija Rojec), Licos Discussion papers DP 318, September 2012.

Foreign acquisitions are an increasingly important mode of FDI in the new EU member states (NMS). Using firm-level data and a common estimation framework for seven NMS we study pre-and post-acquisition performance of acquired firms. We find that selection criteria of target firms differ significantly across countries. In some countries evidence tends to support the idea of ‘cherry picking’ with better firms being chosen as targets for acquisition, while in the others `lemons’ with growth potential seem to be selected. Regardless of targeting `cherries’ or `lemons’, performance of acquired firms improved after the acquisition, whereby the boost in productivity has not been achieved by reducing employment but mostly by increased efficiency in the use of labor and especially capital. Employment also increased. Foreign ownership yields biggest rewards to small unproductive firms.

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The Performance of Trading Firms in the Services Sector – Comparable Evidence from four EU Countries  (together with Stefanie A. Haller, Ville Kaitila, Mika Malirante, Emmanuel Milet and Matija Rojec), Licos Discussion papers DP 317, August 2012.

We analyse common stylized facts of services firms engaged in trade in a comparative study across four EU member countries. We find that, though relatively less engaged in trade than manufacturing firms, services firms have similar traits. Services firms are more likely to import than to export. Their prevalent type of trade is trade in goods. The complexity of trade activities is increasing in firm size and productivity. Two-way traders outperform one-way traders. Services are more likely to be traded by firms already engaged in trade of goods. Changes in trading status by either adding another dimension of trade (imports, exports) or another type of product (goods, services) are infrequent and are associated with significant pre-switching premia. In contrast, learning effects from switching trading status are uncommon. This evidence points to significant fixed cost of being engaged in trade. Thus, the literature on heterogeneous firms is able to explain the sorting of firms into trading and non-trading firms in the services sectors as well.

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Does innovation help the good or the poor performing firms? (together with C. Kostevc and M. Rojec), Economic Letters, 115 (2), May 2012, 190-195.

The paper finds affirming results that innovation has a beneficial effect on firm productivity. This effect depends on firms’ distance to frontier and to firms’ relative performance. Only firms with below average productivity growth are likely to benefit from successful innovation. Faster growing firms are shown not to extract any additional benefits from innovation. This evidence shows that innovation can promote the productivity convergence of firms.

A working paper version of the paper is available here.

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Import Churning and Export Performance of Multi-Product Firms (together with J. Konings and S. Polanec), Licos Discussion papers DP 307, March 2012.

In this paper we analyze the impact of churning in the imported varieties of capital and intermediate inputs on firm export scope and productivity using most detailed transaction level trade data for Slovenian manufacturing firms in the period 1994-2008. We find that churning in imported varieties is far more important than reduction in tariffs or declines in import prices for firms’ productivity growth and increased export product scope. Both adding and dropping of imported input varieties thus seem to be of utmost importance for firms aiming to optimize their input mix towards their most valuable inputs. These effects are further enhanced when excluding the simultaneous trade in identical varieties, suggesting that pass-on-trade has less favorable effects on firms’ long-run performance than regular trade.

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Agglomeration Economies, Globalization and Productivity: Firm level evidence for Slovenia (together with J. Konings), forthcoming, 2013

This paper analyzes the impact of agglomeration economies on firm level performance measured by total factor productivity for Slovenia. To estimate total factor productivity, we use a control function approach to capture endogenous input choices and self-selection. In contrast to most of the literature, we introduce agglomeration economies that are linked to globalization.  In particular, we distinguish between knowledge spillovers related to domestic and foreign sources of agglomeration effects and analyze the impact of regional export market exposure. We find positive effects of regional knowledge spillovers and international market access on firm level total factor productivity. These effects are stronger for micro and small firms and for firms operating in service sectors. We also show that knowledge spillovers are amplified when there are more foreign multinationals in a region.

A working paper version of the paper is available here.

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A complete list of my recent research papers is available here.