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Trade, Import Competition and Productivity Growth In the Food Industry

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  • Olper, Alessandro
  • Pacca, Lucia
  • Curzi, Daniele

Abstract

Melitz and Ottaviano’s (2008) firm-heterogeneity model predicts that trade liberalization induces a selection process from low to high productivity firms, which translates to an industry productivity growth. A similar firms’ selection effect is induced by market size. In this paper, these predictions are tested across 25 European countries and 9 food industries, over the 1995–2008 period. Using different dynamic panel estimators we find strong support for the model predictions, namely that an increase in import penetration is systematically positively related to productivity growth. The results are robust to measurement issues in productivity, controlling for market size, country and sector heterogeneities, and for the endogeneity of import competition. Interestingly, this positive relationship is almost exclusively driven by competition in final products coming from developed (especially EU-15) countries, suggesting that EU food imports are closer substitutes for domestic production than non-EU imports. These results have some potentially interesting policy implications.
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Suggested Citation

  • Olper, Alessandro & Pacca, Lucia & Curzi, Daniele, 2013. "Trade, Import Competition and Productivity Growth In the Food Industry," 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152385, International Agricultural Trade Research Consortium.
    • Handle: RePEc:ags:iatr13:152385
    DOI: 10.22004/ag.econ.152385
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    1. repec:lic:licosd:33913 is not listed on IDEAS
    2. Duvaleix-Tréguer, Sabine & Emlinger, Charlotte & Gaigné, Carl & Latouche, Karine, 2015. "Quality and Export Performance Evidence from Cheese Industry," 145th Seminar, April 14-15, 2015, Parma, Italy 200237, European Association of Agricultural Economists.
    3. Alessandro Olper & Daniele Curzi & Valentina Raimondi, 2017. "Imported Intermediate Inputs and Firms’ Productivity Growth: Evidence from the Food Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 280-300, February.
    4. Raúl Serrano & Nieves García-Casarejos & Salvador Gil-Pareja & Rafael Llorca-Vivero & Vicente Pinilla, 2015. "The internationalisation of the Spanish food industry, 1970-2012: the home market effect and European market integration," Documentos de Trabajo (DT-AEHE) 1505, Asociación Española de Historia Económica.
    5. Turek Rahoveanu, Adrian & Turek Rahoveanu, Maria Magdalena & Ion, Raluca Andreea, 2018. "Energy crops, the edible oil processing industry and land use paradigms in Romania–An economic analysis," Land Use Policy, Elsevier, vol. 71(C), pages 261-270.
    6. Mona Aghabeygi & Filippo Arfini, 2020. "Assessing the Net Import Welfare Impacts of the Rising Global Price of Food in Italy," Sustainability, MDPI, vol. 12(3), pages 1-10, February.
    7. GAIGNE, Carl & LAROCHE DUPRAZ, Cathie & MATTHEWS, Alan, 2015. "Thirty years of European research on international trade in food and agricultural products," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 96(01), March.
    8. Zohra Bouamra-Mechemache & Carl Gaigné & Stéphane Turolla, 2025. "On the Promotion of Domestic Food Industry. Quantifying the Effects of Reducing Labor Cost and Upgrading Quality [Promouvoir les industries agroalimentaires domestiques : Evaluer les effets de la d," Working Papers hal-05067193, HAL.
    9. Arfini, Filippo & Aghabeygi, Mona, "undated". "Evaluation of Welfare Effects of Rising Price of Food Imports in Italy," 162nd Seminar, April 26-27, 2018, Budapest, Hungary 271953, European Association of Agricultural Economists.
    10. Jafari, Yaghoob & Britz, Wolfgang, 2018. "Modelling heterogeneous firms and non-tariff measures in free trade agreements using Computable General Equilibrium," Economic Modelling, Elsevier, vol. 73(C), pages 279-294.
    11. Oleg S. Sukharev, 2023. "Import substitution policy: Breaking the limits," Upravlenets, Ural State University of Economics, vol. 14(1), pages 33-46, March.
    12. Gullstrand, Joakim & Knutsson, Polina, 2019. "The Spatial Dimension of Import Competition," Working Papers 2019:13, Lund University, Department of Economics.
    13. Olper, Alessandro & Curzi, Daniele & Raimondi, Valentina, 2015. "Import Penetration, Intermediate Inputs and Firms’ Productivity in the EU Food Industry," 2015 Fourth Congress, June 11-12, 2015, Ancona, Italy 207844, Italian Association of Agricultural and Applied Economics (AIEAA).
    14. Xi He, 2020. "US agricultural exports and labor market adjustments," Agricultural Economics, International Association of Agricultural Economists, vol. 51(4), pages 609-621, July.
    15. Xuemei Liu & Wei Chen & William H Meyers & Yinguo Dong, 2022. "Effects of heterogeneous SPS measures on agricultural growth: Evidence from China," PLOS ONE, Public Library of Science, vol. 17(5), pages 1-18, May.
    16. Oziengbe Scott Aigheyisi, 2019. "Import Competition And Labour Productivity In Nigeria," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 4(2), pages 26-34, September.
    17. Ryota Nakatani, 2024. "Food companies' productivity dynamics: Exploring the role of intangible assets," Agribusiness, John Wiley & Sons, Ltd., vol. 40(1), pages 185-226, January.
    18. Zhang, Ming & Du, Panpan & Tu, Xianjin, 2023. "The role of intangible assets in promoting the sustainability of agri-food enterprises: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 928-939.
    19. Jafari, Yaghoob & Britz, Wolfgang, "undated". "Prospects of the Food Processing Sector under Tariff and Non-Tariff Measures Liberalization in the Transatlantic Trade and Investment Partnership," Discussion Papers 250254, University of Bonn, Institute for Food and Resource Economics.
    20. Daniele Curzi & Maria Garrone & Alessandro Olper, 2021. "Import Competition and Firm Markups in the Food Industry," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1433-1453, August.
    21. Luckstead, Jeff & Devadoss, Stephen, 2015. "Impacts of TTIP on Processed Food Trade under Monopolistic Competition and Firm Heterogeneity," 2016 Allied Social Sciences Association (ASSA) Annual Meeting, January 3-5, 2016, San Francisco, California 212817, Agricultural and Applied Economics Association.
    22. Curzi, Daniele & Raimondi, Valentina & Olper, Alessandro, 2013. "Quality Upgrading, Competition and Trade Policy: Evidence from the Agri-Food Sector," 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152387, International Agricultural Trade Research Consortium.
    23. Carl Gaigné & Bruno Larue, 2016. "Public quality standards and the food industry’s structurein a global economy," Review of Agricultural, Food and Environmental Studies, INRA Department of Economics, vol. 97(2), pages 141-148.
    24. A.A. Sennikova & A.A. Pushakrev, 2020. "Evaluation of the Level of Competition in Ukraine in Industrial Production Industries," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 19(1), pages 40-59.

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    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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