Exporters and Importers of Services: Firm-Level Evidence on Italy

Abstract

This work contributes to the small but growing body of literature on international trade in services at firm level. Our dataset, based on a new Bank of Italy survey, provides information on exports and imports of services (excluding transportation and travel) in 2008-09 for almost 3,000 Italian industrial and services firms, divided by partner country and type of service. We report a set of stylized facts on trade in services. We also analyze the choice between export and foreign direct investment in services at the firm level, thus innovating with respect to the previous literature using industry data. The main findings are as follows: the export and import of services is highly concentrated in just a few firms; firm-level variation in trade is positively correlated with firm size and productivity; country-level variation is to a large extent explained by the standard gravity variables; distance strongly reduces trade in services in spite of their intangibility; smaller and less productive firms choose to export rather than sell through foreign affiliates.

Keywords: trade in services, firm heterogeneity, intensive and extensive margin, foreign affliates, export versus FDI

JEL Classification: F14, F23, L80