Economics in a picture
The specific shocks to the largest Portuguese firms explain a significant portion of the fluctuations of total exports of goods
An important feature of Portuguese exports of goods is their strong concentration on a small group of large firms. In 2017, the 250 largest exporting firms accounted for almost 60% of total exports of goods. This percentage increases to 80% when considering the 1000 largest exporters.
An implication of this disproportionate share of the major firms in goods exports is that the different specific shocks that impact them may not cancel out, thus influencing developments in total exports. The specific shocks to large firms can be summarised in a so-called “granular residual”, obtained by weighing the differences between the growth rate of exports of each individual firm and the average rate of the group of major firms. As illustrated for the case of the 1000 top exporters, this granular residual has a strong relation with the growth of total Portuguese exports, accounting for more than one-third of aggregate fluctuations in the period 1994-2017. This means that volatility at the firm-level has a significant impact on the dynamics of total exports over time. This result suggests that – in addition to the aggregate shocks to external demand and competitiveness – it is important to monitor a panel of major exporters to better understand and anticipate the growth of total exports of goods.
Prepared by Sónia Cabral, Carlos Melo Gouveia and Cristina Manteu. The analyses, opinions, and findings expressed above are those of the authors and do not necessarily coincide with those of Banco de Portugal or the Eurosystem
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