Fact of the Week: Manufacturing Firms That Adopt Robots Export More Often Than Non-Adopters
Source: Joachim Wagner, “Robots and extensive margins of exports: Evidence for manufacturing firms from 27 EU countries,” Kiel Centre for Globalization (KCG), KCG Working Papers, no. 33 (January 2024).
Commentary: A recent working paper by Joachim Wagner analyzed the effect of robot adoption on manufacturing firms’ exports in the European Union. The study looked at over 2,300 manufacturing firms among 27 European Union (EU) member states. The data on firm characteristics and activities came from the Flash Eurobarometer 486 survey. The authors used that survey’s yes/no question on robot adoption to get their dummy variable for measuring the marginal effect of robot adoption. Their model controlled for firm age, firm size, and patent activity. The study looked at results for seven different regions. Namely, those regions were the EU members, European countries outside the EU, North America, Latin America, China, the rest of Asia, and Africa and the Middle East together. The study had two major findings. In particular, manufacturers that adopt robots are more likely than non-adopters to export, and they also export to more regions.
When looking at export activity, the authors found that manufacturing firms that adopted robots were 20.8 percent more likely to export than non-adopters. When looking at individual regions, the “premium” for robot adoption was highest for exports to other EU member countries. That is, manufacturers that adopted robots were 20.2 percent more likely to export to other countries within the EU than non-adopters. Additionally, manufacturers that adopted robots were 13.9 percent more likely to export to European countries outside the EU, 13 percent more likely to export to North America, 7.4 percent more likely to export to Latin America, 9 – 10 percent more likely to export to China or elsewhere in Asia, and 7.9 percent more likely to export to Africa and the Middle East.
When looking at the diversity in export destinations, the authors found that, on average, manufacturers that adopted robots exported to 0.50 more regions than non-adopters. To be clear, that result is merely an average and would include some firms that export to only one of the aforementioned regions along with some that would export to all seven of them. Nonetheless, it suggests that manufacturers that adopt robots export to more regions than non-adopters. Such findings highlight the role that robot adoption plays in enhancing firms’ international competitiveness. As such, governments should design their economic policies with the goal of incentivizing firms to adopt robots and other advanced technologies that can improve their competitiveness.
