The Determinants of Export Performance: Panel Data Evidence for Irish Manufacturing Plants

The dramatic GDP and export growth of the Republic of Ireland over the last decade forms a marked contrast with that of its nearest neighbour Northern Ireland. In the Republic of Ireland, export volume growth averaged 15.5 per cent pa from 1991-99 compared to 6.3 per cent from Northern Ireland. Using data on individual manufacturing plants throughout Ireland this paper considers the determinants of export performance in the two areas. Larger, externally-owned plants with higher skill levels are found to have the highest export propensities in both areas. Other influences (plant age, R&D etc.) prove more strongly conditional on location, plant size, and ownership. Structural factors (e.g. ownership, industry) explain almost all of the difference in export propensity between larger plants in Northern Ireland and the Republic of Ireland but only around half of that between smaller plants. Significant differences are also evident between plants in terms of their sources of new technology. For indigenously-owned plants, in-house R&D is important. For externally-owned plants, R&D conducted elsewhere in the group typically outside Ireland proves more significant. Both this external dependency and lower than expected export propensity on the part of small plants in Northern Ireland represent significant policy challenges for the future.