The determinants of exports in the Greek manufacturing sector

Abstract

The paper uses price and non-price measures of competitiveness to investigate the determinants of Greek manufacturing export over the period 1988–2005. The conceptual framework bases on the estimation of an export demand function augmented with supply side factors. The findings of the paper indicate that the price elasticity of Greek exports remains higher than the elasticity of any other determinant. This indicates that the main driver of Greek exports has been the ability to reduce prices. Although, exports have a smaller elasticity in product differentiation, technological stock impacts positively on exports of all industrial groups. The results also indicate that in industries with greater ability to differentiate products, the price elasticity of exports becomes smaller. As Greece has experienced substantially losses in competitiveness of traditional low-technology sectors, the above result imply that a successful export paradigm in the future should pay attention to non-price competitiveness. The empirical analysis also suggest that exporting has been a residual activity for Greek manufacturers as increases in production capacity due to demand fluctuations led to exports decreases.