Source: Joachim Wagner, “Cloud Computing and Extensive Margins of Exports - Evidence for Manufacturing Firms from 27 EU Countries,” Working Paper Series in Economics, University of Lüneburg, Institute of Economics, no. 427 (February 2024).
Commentary: A recent working paper by Joachim Wagner analyzed the effect of cloud computing 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 cloud computing usage to get their dummy variable for measuring the marginal effect of cloud computing. 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, 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 use cloud computing systems are more likely than non-users to export, and they also export to more regions.
When looking at export activity, the authors found that manufacturing firms that used cloud computing systems were 8.9 percent more likely to export than non-users. The “premium” for cloud computing was highest for exports to European countries outside the EU. That is, manufacturers that used cloud computing were 10.9 percent more likely to export to European countries outside the EU than non-users. Additionally, manufacturers that used cloud computing were 6 percent more likely to export to North America, 4.9 percent more likely to export to Latin America, 6 – 6.5 percent more likely to export to China or elsewhere in Asia, and 8 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 used cloud computing exported to 0.45 more regions than non-users. 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 use cloud computing export to more regions than non-users.
