European Exporters Research Articles

Unpacking Stimuli and Barriers to Internationalization Across Export Stages: The Case of Spanish Wine Firms in China

ABSTRACTFirm internationalization has been analyzed from different angles based on various theories. However, qualitative research on the stability of the factors that motivate and hinder internationalization across the export stages in emerging markets is limited. This study builds on the “stages” theories of internationalization, providing a detailed analysis of the perceived stability of stimuli and barriers during the exploration, entry, and expansion stages. We focus on a sample of Spanish wine firms exporting to China—a key wine market, with annual growth rates of over 25% between 2000 and 2020. The results suggest that the perception of most barriers is stage‐dependent, varying over time as commitment levels evolve. The main stimuli, on the other hand, remain constant across the different export stages. Moreover, we find that firm size, international experience, and access to local and international networks are key factors that influence the evolution of firms' internationalization in China, while lateral rigidity continues to constrain the expansion of smaller companies. These findings contribute to a deeper understanding of the opportunities and challenges of doing business in an emerging market, particularly in the institutional context in China, as well as their evolution over different stages of internationalization. Furthermore, they offer insights into the dynamics of the Chinese wine market and the implications for European exporters.

Evolving patterns and drivers of waste plastic trade in key global economies

This study examines the global waste plastic trade, impacted by China's import ban and the COVID-19 pandemic, using post-pandemic data to analyse trade flows and project future volumes via ridge regression. From 1988 to 2022, global waste plastic exports totaled approximately 255 million tons, with major contributions from high-income regions like Europe, Asia, and North America. China emerged as the primary importer, accounting for over 50 % of global imports. The analysis highlights the growing role of smaller European exporters and increased intra-regional trade, with economic factors and oil prices significantly influencing trade dynamics. The pandemic's impact on trade was minimal, maintaining steady export levels in countries like the US and Germany. Projections suggest a minimum global export of 8.1 million tons by 2030 under the GAP scenario. The study emphasises the complexity of waste plastic management and the importance of global cooperation, providing key insights for future research.

EU in search of a Carbon Border Adjustment Mechanism

To meet the targets of the EU’s Fit for 55 package, the European Commission proposed in July 2021 to implement a Carbon Border Adjustment Mechanism (CBAM) to replace free allocation of Emission Trading System (ETS) allowances for the most trade-exposed emitting industries. CBAM aims to prevent carbon leakage and restore a level playing field in high-emitting industries. Its design, as voted by the European Council in March 2022, by the Parliament in June, and ultimately amended by a provisional agreement between the Council and the European Parliament in December 2022, raises several issues. This paper aims to quantify the economic and environmental impacts of different choices regarding this design. Simulations are based on a dynamic general equilibrium model representing imperfect competition, input–output relations, greenhouse gas emissions, the endogenous price of emission quotas and the presence of free allocation of allowances. We show that CBAM is effective in reducing carbon leakage. But its design increases the price of carbon in the European Emissions Trading Scheme. Competitiveness losses in export markets are expected for downstream sectors that are not covered by the CBAM, as well as for European exporters of high-emitting industries, even in the presence of rebates.

The Economics of Protectionism and Panic: The European Natural Gas Disaster of 2021–2022 (so far)

Europe is living through a disaster in its natural gas industry that is harming energy consumers and businesses throughout the continent. Using levers of market power that European regulatory and legislative institutions unwisely gave to it over the prior two decades, with the cooperation of Europe's member state natural gas companies, Russia manipulated exports to Europe in the late 2021 run‐up to its invasion of Ukraine. That manipulation has not only caused panic pricing of Russian supplies, but also for the natural gas coming from other countries to Europe, such as Norway and Algeria, for which no panic was necessary. The spread of panic pricing came about because of purposeful actions in Europe to place most natural gas import pricing on an unstable knife edge—institutionalizing the ability of such panic pricing to permeate all energy import prices and disrupt the European energy markets as electricity market models picked up those panicked internal gas prices. Such disruption has caused heavy state subsidization of energy prices throughout Europe, insolvency, crippling of European exporters—such as Italy's highly regarded ceramics industry, nationalization of some energy businesses, and increasing member state abandonment of the European Energy Charter Treaty.

Delivery times in international competition: An empirical investigation

This paper investigates the role of timely delivery in international competition. Using a demand-side, industry-specific measure of time-sensitivity, we assess the effect of Chinese competition on the export performance of Eastern European transition economies into Western European (EU15) destination-product markets. Our empirical analysis relies on exploiting the increase of Chinese competition in global markets during the first decade of the 2000s. We find evidence of heterogeneous adjustments to Chinese competition among Eastern European exporters due to the differential importance of timely delivery across sectors (i.e. time-sensitivity). While we observe sizable real displacement effects, they appear to be at least 50 percent smaller for time-sensitive exports. Relying on firm-level customs data, we establish that this mechanism also plays a role for responses to Chinese competition within firms.

One belt, one road, one way? Where European exporters benefit from the new silkroad

We analyze the trade effects of a new unfolding transport infrastructure in connection with China’s Belt and Road Initiative. Using panel data for the years 1996–2018, featuring 27 exporting countries and 96 industries, we exploit variation in the timing and number of railway connections to estimate whether European countries benefit from increased export revenues and product variety of their shipments to China. We find that both increase and that also indirectly connected countries benefit. Using additional data on the mode of transport, we find that industries with intermediate time-sensitivity appear to increase their utilization of rail-freight to China the most and confirm that the overall increase in exports is also driven by these industries. We further show that mainly Central, Eastern and Southeast European regions are specialized in economic activities related to “railway adopting industries”, which makes likely to benefit the most from first-order gains of improved market access and export opportunities.

Stepping up to the mark? Firms’ export activity and environmental innovation in 14 European countries

ABSTRACT We investigate the ability of exports to trigger the adoption of environmental innovation (EI) in firms, shedding light on the determinants of convergence in environmental standards for Europe’s catch-up economies. To analyse this question empirically, we measure the latter as the 1) probability a firm adopts EI and the 2) breadth of EI adoption in firms. Applying Logit and Poisson pseudo-maximum likelihood estimations to firm-level data for 14 European countries, we find that particularly Eastern European exporters report higher EI adoption propensities, an effect exclusively driven by process-based EI and not observable for product-based EI. Additionally, we reveal that regardless of a firm’s origin, exposure to importing countries with high market-related environmental policy stringency, is linked to the adoption of EI. We conclude that learning-by-exporting, regulation-push and demand-pull mechanisms may help to explain these findings, with foreign markets being characterised by a wider diversity of stakeholder preferences.

Trade, competitiveness and investment: an empirical assessment

ABSTRACTThe Eurozone crisis has exposed several weaknesses of the European Monetary Union economies. This paper aims to assess the impact on external competitiveness of an expansionary capital stock policy that could contribute to reduce the trade balance asymmetries within the EU and help European exporters to recover their competitive role in international markets. A policy action to increase capital stock accumulation through investment in selected European countries could generate a double dividend: increasing both price and nonprice competitiveness, so stimulating their competitive position as exporters, and consolidating the growth path of EU economy. The analysis employs a bilateral trade model built at INFORUM with several distinguishing characteristics: a comprehensive bilateral data set, econometric estimation of key parameters, and emphasis on sectoral details. Our findings show that a capital stock increase is effective in narrowing trade imbalances within EU. Heterogeneous effects are estimated for commodities in China and the US.

Trade concentration and dynamics of the Norwegian imports: an application of R-MANOVA model

This article proposes to analyse trade concentration and dynamics of the Norwegian import's expenditures by applying the two-way random effect MANOVA (R-MANOVA) model. The MANOVA model factors considered in this econometric analysis are origin continents or countries (spatial effects) and the business cycles (dynamic effects). The R-MANOVA model fit estimation results confirms that the Norwegian import trade is sustainable in both short and long run controlling for the effect of both origin continent and business cycles. More importantly, the expenditure and the share of Norwegian imports across the continents show considerable dynamics. The overall econometric estimation results suggest that across all continents the Norwegian import expenditure is increasing with time. However, the share of the Norwegian import expenditures across continents is relatively stable. The analysis confirms that European exporters will be the leading partners for Norwegian import expenditures in future trade patterns. The ranking of the remaining continents in descending order will be Asia and Oceania, North and Central America, South America and Africa.

Factors determining the trade costs of major European exporters

The aim of this paper is to analyse the determining factors of trade costs in the top European exporting nations (Germany, United Kingdom, Italy, France, Netherlands, Belgium, Spain and Sweden). For this purpose, we have estimated a trade costs equation to evaluate the importance of logistical performance and other variables that may be key in determining trade costs. Our results reveal the great importance of logistics, even greater than the effect of distance on trade costs, and they also show that in those countries where trade costs are lower, logistics becomes more decisive in international trade. This analysis allows one to draw conclusions on the type of improvements necessary for cost reductions and, therefore, for greater international competitiveness. The research has been conducted for 2 years, thus facilitating the detection of possible changes that can in turn reveal the existence of a trade pattern in these countries.

A European Perspective on the US Plans for a Destination Based Cash Flow Tax

The Republican majority in the US House of Representatives is considering the introduction of a destination based cash flow tax (DBCFT). While its global implementation has the potential of substantially increasing welfare, a unilateral introduction of such a tax system raises a range of questions due to the co-existence with source based taxation systems abroad. We consider the US tax plans from an EU perspective. We show that European exporters may suffer, but European firms with affiliation in the US may benefit from a switch to the DBCFT. American multinational firms with affiliates in the EU will be the likely losers of this policy – a surprising finding given President Trump’s “America first!” rhetoric. Finally, tax competition over profits, IP location and investment will further intensify, which will require policy reactions by the EU and its member countries far beyond the implementation of the OECD BEPS project. We will therefore also discuss the legal and economic implications of possible adjustments in EU tax systems.

Die radikalen Steuerpläne der US-Republikaner und die Folgen für die EU

The Republican majority in the US House of Representatives is considering the introduction of a destination-based cash flow tax (DBCFT). While its global implementation has the potential to substantially increase welfare, a unilateral introduction of such a tax system raises a range of questions due to the existence of source-based taxation systems abroad. We consider the US tax plans from an EU perspective. We show that European exporters may suffer, but European firms with affiliation in the US may benefit from a switch to the DBCFT. American firms will be the likely losers of this policy. Finally, we discuss potential policy reactions by the EU and its member countries as well as legal and economic implications of possible adjustments in EU tax systems.

A dead-end tunnel or the light at the end of it: The role of BRICs in European exports

Emerging countries are gradually becoming the core of the world's middle class concentration and their demand accounts for a steadily increasing share of European exports, yet studies on determinants of trade with these markets, especially on the sectoral level, are lacking. In this article we use a dynamic nonlinear cointegrating approach to better understand trade factors relevant for European exporters in the BRIC (Brazil, Russia, India and China) markets across industries. Results show that all trade determinants in our models, i.e. exchange rates, relative prices and foreign demand, are relevant for European exports to the BRICs, although their impact is heterogeneous across countries and industries. We then apply cluster analysis to group exports that respond similarly to changes in major trade determinants in order to identify current bottlenecks and reveal opportunities for European exporters in the BRIC markets. We find that trade patterns are stable over time; there is an asymmetric response to exchange rate movements, and that three clusters, with distinct characteristics, comprise over 90% of European exports to the BRIC’ markets. Results shed some light on the drivers of European-BRICs trade and the way recent geo-political and economic developments in BRICs might affect European exports.

Forest-food nexus: a topical opportunity for human well-being and silviculture

As population will reach over 9 billion by 2050, interest in the forest-food nexus is rising. Forests play an important role in food production and nutrition. Forests can provide nutritionally-balanced diets, woodfuel for cooking and a broad set of ecosystem services. A large body of evidence recommends multi-functional and integrated landscape approaches to reimagine forestry and agriculture systems. Here, after a commented discussion of the literature produced in the last decade about the role for forests with respect to the food security global emergency, we summarize the state of the art in Italy as a representative country-case-study. The aim is to increase awareness about the potential of silviculture in Italy for combining ecological resilience with economic resilience, and reducing the pressure over tropical and sub-tropical forests by means of a sustainable intensification of forest management at national level. Although a quantification of the Italian non-wood forest products is difficult, the potential of this sector for the Italian bioeconomy is relatively high. Italy is among the four top European exporters of cork stoppers, is one of the three top countries for chestnut seed processing, and is among the leading exporters of wild mushroom, while it is the only European country among the top five global importers of tannins. In order to develop this sector for the food industry, more research is needed on non-wood forest products, the scale of production, emerging markets, marketing and production innovation. On the other hand, chain-supply fragmentation, landowner inertia, and lack of governance and cooperation may hamper an effective exploitation of non-wood products. A renewed joint impulse for exploitation of wood and non-wood products may come from a sustainable intensification of forest management. The strategies to guarantee an effective supply of non-wood products require appropriate business skills and the presence of a structured business services. A transparent market is also essential. Therefore, the introduction of standards (like those by forest certification schemes) is very important. They can add value to products and emphasize the importance and complexity of the forest sector. However, the implementation of sustainable forest management for an effective supply of non-wood products is affected by the availability of appropriate planning tools, and the public officers need a new mindset to stimulate and support business capacity of forest owners.

Effect of exporter’s incentives on foreign distributor’s role performance

A foreign distributor’s motivation to perform local marketing tasks for an exporter is often poor due to agency conflicts and transaction cost constraints characterizing the export channel. While exporters may engage in actions such as offering incentives and overseeing partner activities to improve foreign marketing, such intrusions into partner operations often fail to enhance the distributor’s role performance. Drawing on motivation theory, the authors develop a model explaining the efficiency of different incentive types in enhancing the distributor’s motivational context to act on behalf of the exporter, thereby improving relationship quality, distributor relationship-specific investments, and, consequently, distributor role performance. The authors use a sample of 278 European exporters to test hypotheses regarding relationship factors that mediate and moderate the incentive–role performance relationship. The results indicate that the impact of low-powered incentives (LPIs) substitutes for the effect of high-powered incentives on relationship quality and specific investments, the key mediators driving distributor role performance. In addition, exporter oversight of distributor activities weakens the effectiveness of LPIs to increase distributor-specific investment. The authors derive implications for designing portfolios of incentives, with inferences based on efficiently matching incentive-induced motivational context with foreign distributor’s actions required to accomplish exporter goals.

Currency Returns in Different Time Zones

Currency returns in different time zones have different dynamics. During U.S. business hours European currencies earn positive returns against the dollar, and during European business hours these currencies earn negative returns. I propose a new explanation that is based on market segmentation and financial intermediation in the foreign exchange market. U.S. exporters arrive at the market during U.S. business hours and want to sell foreign currencies, but they cannot find a counterparty because European exporters are sleeping. They rely on financial intermediary to carry the currency position across time zones, who charges a risk premium that leads foreign currencies to appreciate against the dollar during U.S. business hours.

The Canada – EU Free Trade Agreement Demystified: New Opportunities for Trade, Investment and Government Procurement

The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) 'agreement in principle' was signed on 18 October 2013 by Prime Minister Harper and European President Jose Manuel Barroso. On 29 October 2013, the Prime Minister tabled a report on CETA and hailed it as: 'the biggest deal ever concluded by Canada'. If it is not the biggest deal, it is certainly a big deal. CETA provides a variety of trade, investment and government procurement opportunities to Canadian and EU businesses which are expected to pay dividends for years to come. CETA will provide Canada with access to the twenty-eight member EU, which has over 500 million consumers, and CDN 17 trillion in annual economic activity. It will remove 98% of EU import tariffs on goods originating from Canada (e.g., aerospace parts, agricultural products, automobiles, beef and bison, chemicals, dairy products, forest products, fruits and vegetables, grains and oils, industrial machinery, iron and steel, IT equipment, medical equipment, metals, minerals, plastic products, and seafood products). CETA could boost Canada's annual income by CDN 12 billion, create 80,000 jobs, and result in a 20% annual increase in bilateral trade. Once CETA is ratified, Canada will have preferential trade agreements with countries having 53% of global GDP (approximately CDN 36.4 trillion), and a trade advantage over the USA. The EU expects CETA to result in duty savings of approximately CDN 700 million. CETA will remove Canadian import tariffs on goods including automobiles, some cheeses, industrial machinery, seafood products, and wine and spirits. European exporters will save three times as much in annual duty payments as Canadian exporters. Canadian businesses and consumers stand to benefit if retailers and exporters pass on duty savings to them. At present Canada is the EU's fourth largest source of investment, and the EU's twelfth largest export market. CETA is not just a free trade agreement. It addresses issues such as services and investment; government procurement; intellectual property; dispute settlement; sustainable development, the environment; immigration and labour. This ambitious agreement will create business opportunities for a large number of sectors including: advanced manufacturing; the automotive industry; chemicals and plastics; agriculture and agri-food; food processing; metals and mineral products; fish and seafood products; information and communications technology; services; investment and government procurement. Within an improved regulatory environment under CETA, Canadian and EU businesses will be able to forge new alliances, and access new markets.

THE DEVELOPMENT OF THE LOGISTICS SYSTEM OF THE REPUBLIC OF BELARUS

In the article some questions of the development of logistics sector in the Republic of Belarus are considered. The favorable geographical position of Belarus determined a rapid development of logistics services in the country. Belarus is interested in growth of transit potential, the increase of accessibility of the remote areas, as well as the major European exporters. The most relevant evidence of this interest is an international project “Amber Coast Logistics“, which is implemented in the framework of “Baltic Sea Region program“ (funded by EU) and aims at increasing the volume of foreign trade in the region. Since the Index of Transit has been developed, the growth of cargo flows was forecasted as a result of the elimination of barriers for development of foreign economic activities in Belarus. The new transport corridors, linking the southern Baltic Sea region with the countries of the Customs Union and Ukraine have been proposed, as well as the new multi-modal transport chains through these corridors, oriented, first of all, to Belarus.

PERFORMANCE OF CAPITAL MARKETS IN THE EU AND IN TURKEY: COINTEGRATION ANALYSIS

The paper deal with the problem of crisis, and post-crisis, performance of capital markets in the European Union and in Turkey. Due to liberalization of all balance of payments accounts and increasing financial integration of the Eurozone with the rest of the world there was a very strong response of stock exchanges to the sub-prime loan crisis originating in the United States. There was no country that escaped the wave effects of this crisis. There should be no doubt that what matters for each and every economy in the world these days is not the resistance for external factors, but the speed of recovery. In this regard internal factors play the crucial role, both in the private sector, and in a national economic policy. We should no longer ask questions whether economic integration is beneficial or not, but the focus should be on economic policies and general economic framework, including legal rules, that allow for fast and dynamic recovery and returning on a sustainable growth path. When observing economic performance of the European Union and its neighbors, it becomes evident that there are economies that managed to recover quickly after a short recession caused by global factors. A good example is Turkey with its vibrant economy and fast growing standard of living. Changes in the wealth of a nation lead to permanent changes in consumption patterns and as such create market opportunities for European exporters. However, before the real sector expansion is announced, there is a need for fixed capital formation domestically. For emerging and developing economies it is necessary to import capital and initiate growth on the basis of foreign savings. Turkey is such a case, where prior to fast economic expansion, a significant development of a national stock market happened. The Istanbul Stock Exchange attracted also foreign investors, allowing the European capital to take part in the success of Turkish economy. Using simple statistical methods of cointegration to disclose co-movements in stock market indexes, it became possible to answer questions about the nature and strength of integration of financial markets in the European Union and in Turkey. It turned out that performance of the Istanbul Stock Exchange is related strongly to the London Stock Exchange and it responds more than proportionately to all developments in the UK capital market. In the same time, the cointegration with the stock market in Frankfurt is less pronounced. Despite FTSE and DAX are highly positively correlated, the response of the ISE to developments in DAX are less than proportional. It is possible to observe stronger relationship in the crisis and post-crisis period. While DAX and FTSE diverged, the strength of response of the ISE to both: DAX and FTSE was much stronger. Coefficients estimated for the whole period are on average by 100% higher than for the pre-crisis period. This result may indicate that integration of the studied markets has increased recently. Alternative interpretation is based on a belief that there has been a common path during crisis and post-crisis response. Interpretting the performance of studied stock market indexes, as leading indicators allows for conclusion that the European Union will hardly resume growth in 2012. Investment opportunities in Turkey seem much more attractive and promising than in the EU. This may lead to capital reallocation between the EU-27 and Turkey, which may further aggravate the problem of unemployment and economic stagnation in the EU. DOI: http://dx.doi.org/10.5755/j01.eis.0.6.1517

Georgian consumers' evaluation of products sourced from European Union member countries

PurposeThe purpose of this paper is to examine country of origin (COO) effects among Georgian consumers towards selected European Union (EU) member country products. Within this general framework, the present paper aims to determine Georgian consumers' perception of products sourced from Germany as the largest EU exporter to Georgia, Italy as the source of some well‐known product classes, and Poland as a new member of the EU.Design/methodology/approachThe study was conducted among 313 consumers, from Tbilisi, Batumi, Kutaisi, and Rustavi in May and June of 2005. Based on the experiences and the findings of an earlier survey, ten products available in the Georgian market were identified as relevant for the study. A five‐point Likert scale was used to gauge respondents' perceptions of quality of each product from respective countries.FindingsMost of the products made in Germany are perceived high in quality. Italy is rated high in some major product classes like clothing and fashion products. Poland is not rated high for any product class but, its products' lower prices are appreciated by Georgian consumers. Findings support the earlier research specifying the heuristic between product evaluation and degree of economic development of the sourcing country. COO evaluations vary according to product class. The results also confirm past research indicating the differentiating effect of demographic variables on COO perceptions. COO image of Germany and Italy contributes to general “made in Europe” image, the image of Poland moderates it.Research limitations/implicationsThe paper's main tenet was that Georgian consumers had high regards for products coming from highly developed EU member countries. This is a static study and looked at the COO phenomenon during one period of time (static approach). Further studies are needed to determine the COO effect over a longer period of time (longitudinal studies). In addition to the study of COO effects on country's product class, the study of product form, product brand, and product brand options may produce more illuminating results.Practical implicationsGeorgian importers and European exporters should consider the “made in” strength of each product for competitive advantage and build up their product assortments accordingly. For promotion, exporters to Georgia and resellers in Georgia may put more emphasis on COO of the products which have relatively strong product country image. Relatively, weaker products from Italy and Germany may be supported by using a general country image. The “made in Europe” label may also help to increase the appreciation of products coming from Poland.Originality/valueThe present paper provides empirical evidence about consumers' perception of foreign products in a less researched geography.