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

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

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

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Paper provided by European Central Bank in its series Working Paper Series with number 0918.

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Date of creation: Jul 2008
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Handle: RePEc:ecb:ecbwps:20080918
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