This document discusses how internationalization affects different firms. It focuses on Europe, which accounts for 25.8% of global GDP. Internationalization is measured by exports, imports, and foreign direct investment. Productivity and competitiveness are key factors for firms. Productivity depends on technological progress, investment, labor quality, and innovation. Competitiveness is influenced by factors like costs, subsidies, and productivity. Firms that export more products to more markets tend to perform better. Characteristics of successful exporters include being larger, more profitable, and capital intensive. Distance between countries impacts bilateral trade flows.

1. How internationalization affects different
firms in a different way ?
FIRM PERFORMANCE

2. Let’s focus on Europe
25.8% World’s GDP
Free market
739 Millions Hbts
Triad’s member

3. Agenda
What is Internationalization
Productivity
Competitiveness
Winners and losers

4. Internationalization...
shares of exports
imports
Foreign Direct Investment(FDI)
...an elusive concept
generate value
international operations

5. Internationalization
An international organization dealing with the
global rules of trade between nations. Its main
function is to ensure that trade flows as
smoothly, predictably, and freely as possible.
Definition of World Trade Organization - WTO:

6. Productivity=
technological progress
Capital investment
labour volume and quality
labour intensity
social cohesion...
Ratio of volume of output to a volume of input use

7. Increasing productivity
Good management
Education and training
Infrastructure
Investing in R&D
Innovation

8. What is competitiveness?
M Porter’s diamond
Related
and supporting
industries
Factor
conditions
Firm strategy,
structure
and rivalry
Demand
conditions
Government
Chance

9. How to boost competitiveness
Inputs
Wages
Providing subsidies
Tax incentives
Reducing costs:
And
Increasing the productivity

10. Root causes of
competitiveness gap
Exchange rates
Inflation
Taxes
Wages
Relative costs =

11. Global competitiveness =
Labor Costs + Productivity
Unit Labor Cost =
Labor compensation/ Output per employee =
labor productivity
ULC depends on both labor compensation gap and productivity
gap
comparing relative levels of labor compensation per employee with
relative levels of labor productivity within Europe and EMCs
The key is:

12. Relative hourly labour costs
Bangladesh: $0,25
Vietnam: $1
China: $3
Poland: $10
Germany: $36
France: $41 Source: US Bureau of Labor Statistics

13. Labour productivity

14. Productivity is the driving
force of competitiveness
Both wages and productivity are lower in the emerging
economy
If the productivity gap is as large as labor
compensation gap= no comparative advantage
But

15. Winners: Top exporters
Firms which exports more
than 10 products to more
than 10 markets: 75% of
total export
Only firms that are large
enough and have a rich
enough portfolio can
withstand international
competition
Happy few

16. Characteristics
• FDI-markers perform better than exporters and
exporters perform better than non-exporters
>
• Exporters are generally: - Bigger
- More profitable
- More capital intensive
- Pay higher wages than non-
exporter

17. Bilateral trade
• Trade flows are:
• Trade impediments increase with the distance between
countries
• positively affected by countries’
sizes
• negatively affected by trade
impediments

18. Distance affects
number of exporters
average exports per exporter
number of product exported
average export per firm of each product
export price
export quantities

19. Keys of success
Number of exporter matters the most
Number of exported product matters too
Firm’s average exports per product matter less
Price & quantities defy the distances

20. What does affect trade?
Sharing a language:
GATT / WTO membership & colonial links increase:
reduce fixed costs
increase the number of
exporters
does not affect the average
amount exported
the number of exporters
reduce the average amount
exported

21. To conclude...
Promote intra-industry competition
Increase the number of exporters
Forget the incumbent superstars
Nurture the superstars of the future
Keep up the fight against small trade costs
access the export and FDI potential of industries
...some proposals