Productive efficiency and exports: an examination of alternative hypotheses for the Greek cement industry

Abstract

Efficiency loss that is due to over- or under-capacity utilization is a significant factor influencing the exporting activity of firms. Using time series data from the Greek cement industry, it is found that efficiency loss triggers export activities up to a certain threshold where firms se to export in order to reduce the deviation from optimum capacity utilization. Beyond this threshold, the size of efficiency loss becomes a major barrier to export in terms of competitiveness. Thus, both the Self-Selection Hypothesis (SSH) and the well-known Market Selection Hypothesis (MSH) may be in operation for various sizes of efficiency loss.

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