Determinants of international trade of machine tools during the Eighties: a shift-share analysis

This paper examines the international trade of the machine tool industry using the shift-share analysis. This methodology sheds light on the effects that market composition and firms' competitiveness have on export dynamics at industry level. In addition, the paper eliminates the influence of price and exchange rate factors on export data during the period 1980-1987. This paper shows that Japanese firms had the most aggressive penetration strategy in the international markets, thanks to the Japanese penetration of fast-growing markets and to a high degree of competitiveness of Japanese firms. Recent changes in U.S. export data give good reasons to believe that the trade balance deficit in the machine tool industry is decreasing. On the contrary, the performance of European exports as a whole is rather disappointing, with the exception of some slight competitive advantages achieved by Italian firms.