Abstract:
This paper identifies the main characteristics that enabled companies activating in industrial sector to whether the recent economic turmoil better, as well as the mechanisms of adjustment in the aftermath of the crisis. Using firm-level data for Romania, one of the most important Central and Eastern European countries, we argue that micro heterogeneity hides different behaviours in terms of survival capacity and exporting activities. The few champions in the industrial sector are i) more productive (in terms of Total Factor Productivity), ii) larger and iii) generally foreign owned. Exporting companies, which are found to be superior in terms of productivity compared to the rest of the economy, maintained their presence on international markets even in time of stress. The 2008-2009 decline of Romanian industrial exports is explained in the vast majority of cases by adjustment in sales value (intensive margin of trade) and to a smaller extent to plant exit, drop in product varieties or number of destinations (extensive margin). The pattern of adjustment reflects that sunk cost might play an important role in foreign trade activities, determining especially large and higher profit margin firms not to exit the markets, but rather to adjust average export value.
