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Imports and profitability in the euro area manufacturing sector: the role of emerging market economies

Author

Listed:
  • Peltonen, Tuomas A.
  • Skala, Martin
  • Santos Rivera, Alvaro
  • Pula, Gabor

Abstract

The paper analyses the impact of import penetration on firms' profitability in 15 manufacturing industries in 10 euro area countries during 1995-2004, focusing on the role of emerging market economies. Our results indicate that import competition from emerging market economies has had an overall negative impact on companies' profitability in the euro area manufacturing sector, especially for imports coming from China and Russia. However, similar negative effects are also estimated for imports from the United States. In contrast, imports from Latin America are estimated to be positively correlated with profitability. Finally, we find asymmetric effects on profitability across euro area countries and sectors. JEL Classification: L11, L13, F12, C23

Suggested Citation

  • Peltonen, Tuomas A. & Skala, Martin & Santos Rivera, Alvaro & Pula, Gabor, 2008. "Imports and profitability in the euro area manufacturing sector: the role of emerging market economies," Working Paper Series 918, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:2008918
    Note: 355041
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp918.pdf
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    References listed on IDEAS

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    Cited by:

    1. Matthias Flückiger & Markus Ludwig, 2015. "Chinese export competition, declining exports and adjustments at the industry and regional level in Europe," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 1120-1151, August.
    2. Lakatos, Csilla & Walmsley, Terrie, 2011. "Dispute Settlement at the WTO: Impacts of a No Deal in the US-Brazil Cotton Dispute," Conference papers 332059, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Álvarez López, M.ª Elisa & Vega Crespo, Josefa, 2017. "La fortaleza competitiva de la economía española/The Competitive Strength of the Spanish Economy," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 35, pages 7-34, Enero.
    4. repec:old:wpaper:338 is not listed on IDEAS
    5. Sepideh Haghi & Sayed Mahdi Mostafavi & Mehdi Behname, 2015. "The effects of globalization on firm’s stock in the selected Asian countries," Economic Analysis Working Papers (2002-2010). Atlantic Review of Economics (2011-2016), Colexio de Economistas de A Coruña, Spain and Fundación Una Galicia Moderna, vol. 1, pages 1-1, June.
    6. Solomon Kinyanjui & Margaret A. Oloko & Hazel G. Gachunga & Beatrice G. Gathondu, 2014. "Competition as a Response Strategy to Globalization by Manufacturing Firms in Kenya," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 5(6), pages 48-60, November.
    7. Christoph Böhringer & Victoria Alexeeva-Talebi, 2011. "Unilateral climate policy and competitiveness: The implications of differential emission pricing," Working Papers V-338-11, University of Oldenburg, Department of Economics, revised Jun 2011.
    8. repec:zbw:hohpro:338 is not listed on IDEAS
    9. Hoedoafia, Mabel Akosua, 2019. "Trade Liberalization and Firm Profitability: Insights from Ghana's Manufacturing Sector," MPRA Paper 97133, University Library of Munich, Germany.
    10. Oziengbe Scott Aigheyisi, 2021. "Threshold Effects of Import Dependence of Economic Growth in Nigeria," ACTA VSFS, University of Finance and Administration, vol. 15(2), pages 198-219.

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    More about this item

    Keywords

    emerging markets; euro area; globalisation; import penetration; Profitability;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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