Economic Determinants and Analysis of the European Union Wood Industry SMEs Employment

Abstract

Wood-based industries are an important part of the European Union (EU) manufacturing sector because their growth can help in achieving EU’s industrial policy goal of raising manufacturing’s gross domestic product (GDP) to 20% by 2020. In this paper, special emphasis is placed on the influence of macro-economic factors on small and medium enterprises (SMEs) employment in the wood industry. The research objective was to test whether traditional macroeconomic indicators of economic growth are significant determinates of SMEs employment dynamics. For estimation of employment dynamics, a two-step Arellano-Bover/Blundell-Bond (a system generalized method of moments) estimator with robust standard errors was used. The model contained the following independent variables: real GDP growth rate; industrial production of wood processing industry; the number of wood processing enterprises; and exporting of manufactured goods of wood processing. The findings confirmed that the increase in GDP growth rate, the industrial production of wood processing, and exporting of manufactured goods of wood processing had statistically significant and positive impacts on SMEs employment. It was also found that the existence of a high number of enterprises had a positive impact on employment.