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Exports, Imports and Profitability: First Evidence for Manufacturing Enterprises

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Author Info

  • Wagner, Joachim

    ()
    (Leuphana University Lüneburg)

Abstract

This paper documents for the first time the relationship between profitability and three types of international trade activities – exports, imports and two-way trade. It uses unique new representative data for manufacturing enterprises from Germany, one of the leading actors on the world market for goods, that merge information from surveys performed by the Statistical Offices and administrative data collected by the Tax Authorities. Descriptive statistics and regression analysis (with and without controlling for unobserved firm heterogeneity and the role of outliers) point to the absence of any statistically significant and economically large effects of trade activities on profits. This demonstrates that any productivity advantages of trading firms are eaten up by extra costs related to selling and buying on foreign markets.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5766.

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Length: 34 pages
Date of creation: Jun 2011
Date of revision:
Publication status: published in: Open Economies Review, 2012, 23 (5), 747-765
Handle: RePEc:iza:izadps:dp5766

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Keywords: profitability; imports; exports;

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References

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  1. Joachim Wagner, 2005. "Exports and Productivity: A survey of the evidence from firm level data," Working Paper Series in Economics 4, University of Lüneburg, Institute of Economics.
  2. Vincenzo Verardi & Christophe Croux, 2009. "Robust regression in Stata," Stata Journal, StataCorp LP, vol. 9(3), pages 439-453, September.
  3. Vito Amendolagine & Rosa Capolupo & Nadia Petragallo, 2010. "Export Status and Performance in a Panel of Italian Manufacturing Firms," series 0027, Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari, revised Jan 2010.
  4. Maria Caterina Bramati & Christophe Croux, 2007. "Robust estimators for the fixed effects panel data model," Econometrics Journal, Royal Economic Society, vol. 10(3), pages 521-540, November.
  5. Henk Kox & Hugo Rojas-Romagosa, 2010. "Exports and Productivity Selection Effects for Dutch Firms," De Economist, Springer, vol. 158(3), pages 295-322, September.
  6. Marco Grazzi, 2009. "Trade and Profitability: Is there an export premium? Evidence from Italian manufacturing firms," LEM Papers Series 2009/16, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  7. Verardi, Vincenzo & Wagner, Joachim, 2010. "Robust Estimation of Linear Fixed Effects Panel Data Models with an Application to the Exporter Productivity Premium," IZA Discussion Papers 4928, Institute for the Study of Labor (IZA).
  8. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, vol. 98(1), pages 394-425, March.
  9. Alexander Vogel & Joachim Wagner, 2008. "Higher Productivity in Importing German Manufacturing Firms: Self-selection, Learning from Importing, or Both?," Working Paper Series in Economics 106, University of Lüneburg, Institute of Economics.
  10. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages F134-F161, 02.
  11. The International Study Group on Exports and Productivity, 2007. "Exports and productivity - comparable evidence for 14 countries," Policy Research Working Paper Series 4418, The World Bank.
  12. Helmut Fryges & Joachim Wagner, 2008. "Exports and Profitability - First Evidence for German Manufacturing Firms," Working Paper Series in Economics 102, University of Lüneburg, Institute of Economics.
  13. Temouri, Yama & Vogel, Alexander & Wagner, Joachim, 2010. "Self-Selection into Export Markets by Business Services Firms: Evidence from France, Germany and the United Kingdom," IZA Discussion Papers 5147, Institute for the Study of Labor (IZA).
  14. Alexander Vogel & Joachim Wagner, 2010. "Exports and Profitability - First Evidence for German Business Services Enterprises," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(1), pages 7-30.
  15. Schank, Thorsten & Schnabel, Claus & Wagner, Joachim, 2007. "Do exporters really pay higher wages? First evidence from German linked employer-employee data," Journal of International Economics, Elsevier, vol. 72(1), pages 52-74, May.
  16. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2010. "Higher wages in exporting firms: self-selection, export effect, or both? First evidence from linked employer-employee data," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 146(2), pages 303-322, June.
  17. International Study Group on Exports and Productivity (ISGEP), 2008. "Understanding Cross-Country Differences in Exporter Premia: Comparable Evidence for 14 Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(4), pages 596-635, December.
  18. Alexander Vogel & Stefan Dittrich, 2008. "The German turnover tax statistics panel," Working Paper Series in Economics 92, University of Lüneburg, Institute of Economics.
  19. Buchinsky, Moshe, 1994. "Changes in the U.S. Wage Structure 1963-1987: Application of Quantile Regression," Econometrica, Econometric Society, vol. 62(2), pages 405-58, March.
  20. Delgado, Miguel A. & Farinas, Jose C. & Ruano, Sonia, 2002. "Firm productivity and export markets: a non-parametric approach," Journal of International Economics, Elsevier, vol. 57(2), pages 397-422, August.
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Citations

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Cited by:
  1. Vu, Van Huong, 2012. "Higher productivity in Exporters: self-selection, learning by exporting or both? Evidence from Vietnamese manufacturing SMEs," MPRA Paper 40708, University Library of Munich, Germany.
  2. Vu, Van Huong, 2012. "Private manufacturing SMEs survival and growth in Vietnam: The role of export participation," MPRA Paper 42489, University Library of Munich, Germany.

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