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To promote transparency and provide information, the Federal Planning Bureau regularly publishes the methods and results of its works. The publications are organised in different series, such as Outlooks, Working Papers and Planning Papers. Some reports can be consulted here, along with the Short Term Update newsletters that were published until 2015. You can search our publications by theme, publication type, author and year.

Value chain integration of export-oriented and domestic market manufacturing firms - An analysis based on a heterogeneous input-output table for Belgium [WP 11-18]

For a finer analysis of competitiveness and value chain integration, this working paper presents a micro-data based breakdown of manufacturing industries in the 2010 Belgian supply-and-use and input-output tables into export-oriented and domestic market firms. The former are defined as those firms that export at least 25% of their turnover. Analyses based on the resulting export-heterogeneous IOT reveal differences between the two in terms of input structures and import behaviour: export-oriented manufacturers have lower value-added in output shares, and they import proportionally more of the intermediates they use. Moreover, exports of export-oriented manufacturers generate a substantial amount of value added in other Belgian firms, in particular providers of services. The policy implication of these results is that Belgium’s external competitiveness depends not only on exporters but also on firms that mainly serve the domestic market. To maximise the impact of export promotion in terms of domestically generated value added, the entire value chain for the production of exports must be taken into account.

The reorganisation of production processes in increasingly fragmented and international value chains poses new challenges for the analysis of value creation and competitiveness based on input-output tables and models. In those tables, firms are grouped into industries according to the type of goods and services they produce. However, firm characteristics such as size, ownership and exporter status may actually be the source of technological differences between firms within industries defined in terms of product similarity. Accounting for such firm heterogeneity through a breakdown of industries into different types of firms is required to increase the relevance of value chain analysis.

In this working paper, the focus is on firm heterogeneity in terms of exporter status: we break down manufacturing industries in the 2010 Belgian supply-and-use tables (SUT) and input-output tables (IOT) into export-oriented firms and firms serving mainly the domestic market. For this purpose, we use the full set of individual firm-level data sources that have served for the construction of Belgium’s official SUT and IOT for 2010 and define export-oriented manufacturing firms as those that export at least 25% of their turnover. The novelty of our approach lies in the data-based (rather than just proportional) estimation of output, input and import structures for export-oriented and domestic market firms.

The analyses based on the resulting export-heterogeneous IOT reveal differences between export-oriented and domestic market firms in manufacturing industries in terms of input structures and import behaviour. Export-oriented manufacturers have lower value-added in output shares, and they import proportionally more of the intermediates they use, i.e. their production processes are more fragmented, in particular internationally. These results, obtained in a setting that is consistent with the national accounts, confirm findings in prior analyses on firm heterogeneity in international trade. Furthermore, input-output multiplier analyses show that export-oriented manufacturing firms are less integrated upstream into the Belgian economy than domestic market firms: a shock to final demand for their output generates less additional output and value added in the Belgian economy than an equivalent shock to domestic market manufacturers. Finally, the export-heterogeneous IOT also allows to illustrate that the exports of export-oriented manufacturers generate a substantial amount of value added in other Belgian firms, in particular providers of services.

The policy implication of these results is that Belgium’s external competitiveness depends not only on exporters but also on firms that mainly serve the domestic market. Export-oriented firms need to be competitive on foreign markets and domestic suppliers have to be competitive in the production of the inputs delivered to those export-oriented firms (internal competitiveness). Hence, to maximise the impact of export promotion in terms of domestically generated value added, it is not sufficient to focus only on export-oriented firms. Domestic upstream suppliers must also be taken into account when defining policies. Overall, for Belgium to reap the full benefits from exports, the entire value chain for the
production of exports must be considered.

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Planning & Working Papers

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