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Chapter 33: Internationalization and Size, Age and Profitability in the United Kingdom
Graham Hall and Ciwen Tu
33 Internationalization and size, age and proﬁtability in the United Kingdom Graham Hall and Ciwen Tu Exports represent about 30 per cent of the Gross Domestic Product of the United Kingdom. Hardly surprisingly, improving export performance has been regarded as important by successive governments, a sentiment exempliﬁed by Lord Clinton Davis (1998), then Minister of Trade: The importance of exporting to Britain’s economy cannot be overstated. Not only does it contribute to our economy, earning the revenue that helps to pay for the standard of living and quality of life we all want, exporting is also the best way of sharpening our competitive edge. The factors associated with the degree of export activity are clearly of relevance to the formulation of industrial policy. Here we consider three candidates: size, age and proﬁtability. We are concerned to establish whether they are related to the proportion of a company’s sales that it exports, the export ratio or the decision to export at all, the export propensity. Our study encompasses ﬁrms of all sizes but particular attention is devoted to small ﬁrms. All models and tests are carried out at sector level because of the strong possibility that industry characteristics could inﬂuence the strength of relationships. The ﬁrst section of this chapter will brieﬂy justify our choice of relationships; the second will describe our data and methodology; the third will report our results on the strength of the relationship between the explanatory variables and the export ratio; the...
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