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Exports, Imports and Profitability: First Evidence for Manufacturing Enterprises

Author

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  • 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.

Suggested Citation

  • Wagner, Joachim, 2011. "Exports, Imports and Profitability: First Evidence for Manufacturing Enterprises," IZA Discussion Papers 5766, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5766
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    References listed on IDEAS

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    1. repec:wsi:wschap:9789813109698_0006 is not listed on IDEAS
    2. Helmut Fryges & Joachim Wagner, 2016. "Exports and Profitability — First Evidence for German Manufacturing Firms," World Scientific Book Chapters,in: Microeconometrics of International Trade, chapter 7, pages 245-277 World Scientific Publishing Co. Pte. Ltd..
    3. Verardi Vincenzo & Wagner Joachim, 2011. "Robust Estimation of Linear Fixed Effects Panel Data Models with an Application to the Exporter Productivity Premium," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(4), pages 546-557, August.
    4. Alexander Vogel & Joachim Wagner, 2016. "Exports and Profitability — First Evidence for German Business Services Enterprises," World Scientific Book Chapters,in: Microeconometrics of International Trade, chapter 8, pages 279-310 World Scientific Publishing Co. Pte. Ltd..
    5. Joachim Wagner, 2007. "Exports and Productivity: A Survey of the Evidence from Firm-level Data," The World Economy, Wiley Blackwell, vol. 30(1), pages 60-82, January.
    6. Alexander Vogel & Stefan Dittrich, 2008. "The German turnover tax statistics panel," Working Paper Series in Economics 92, University of Lüneburg, Institute of Economics.
    7. Henk Kox & Hugo Rojas-Romagosa, 2010. "Exports and Productivity Selection Effects for Dutch Firms," De Economist, Springer, vol. 158(3), pages 295-322, September.
    8. repec:spr:weltar:v:144:y:2008:i:4:p:596-635 is not listed on IDEAS
    9. 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.
    10. 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.
    11. Vincenzo Verardi & Christophe Croux, 2009. "Robust regression in Stata," Stata Journal, StataCorp LP, vol. 9(3), pages 439-453, September.
    12. Alexander Vogel & Joachim Wagner, 2016. "Higher Productivity in Importing German Manufacturing Firms: Self-selection, Learning from Importing or Both?," World Scientific Book Chapters,in: Microeconometrics of International Trade, chapter 4, pages 139-174 World Scientific Publishing Co. Pte. Ltd..
    13. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2016. "Do Exporters Really Pay Higher Wages? First Evidence from German Linked Employer–Employee Data," World Scientific Book Chapters,in: Microeconometrics of International Trade, chapter 5, pages 177-213 World Scientific Publishing Co. Pte. Ltd..
    14. Temouri, Yama & Vogel, Alexander & Wagner, Joachim, 2013. "Self-selection into export markets by business services firms – Evidence from France, Germany and the United Kingdom," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 146-158.
    15. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2016. "Higher Wages in Exporting Firms: Self-selection, Export Effect, or Both? First Evidence from Linked Employer–Employee Data," World Scientific Book Chapters,in: Microeconometrics of International Trade, chapter 6, pages 215-241 World Scientific Publishing Co. Pte. Ltd..
    16. Buchinsky, Moshe, 1994. "Changes in the U.S. Wage Structure 1963-1987: Application of Quantile Regression," Econometrica, Econometric Society, vol. 62(2), pages 405-458, March.
    17. 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.
    18. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages 134-161, February.
    19. repec:ags:stataj:143000 is not listed on IDEAS
    20. 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.
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    Citations

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    Cited by:

    1. Joachim Wagner, 2014. "Extensive Margins of Imports and Profitability: First Evidence for Manufacturing Enterprises in Germany," Working Paper Series in Economics 298, University of Lüneburg, Institute of Economics.
    2. Thanapol Srithanpong, 2015. "Export Destinations and Plant Heterogeneity: Evidence from Thai Manufacturing," Keio-IES Discussion Paper Series 2015-011, Institute for Economics Studies, Keio University.
    3. Joachim Wagner, 2014. "Exports and firm profitability: Quality matters!," Economics Bulletin, AccessEcon, vol. 34(3), pages 1644-1652.
    4. Cenk Gokce ADAS, 2016. "Exporting Firms, Productivity And Profitabiliy: A Survey Of The Evidence From Manufacturing Industries," Proceedings of International Academic Conferences 3606362, International Institute of Social and Economic Sciences.
    5. 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.
    6. Joachim Wagner, 2014. "Is export diversification good for profitability? First evidence for manufacturing enterprises in Germany," Applied Economics, Taylor & Francis Journals, vol. 46(33), pages 4083-4090, November.
    7. A. Altuzarra & R. Bustillo & C. Rodríguez, 2016. "Understanding Export Market Success: Evidence from Manufacturing Firms," Open Economies Review, Springer, vol. 27(1), pages 161-181, February.
    8. Bedassa Tadesse & Roger White & Elias Shukralla, 2015. "Production Efficiency and the Extensive Margins of U.S. Exporters: An Industry-level Analysis," Open Economies Review, Springer, vol. 26(5), pages 941-969, November.
    9. Gabriel Felbermayr & Mario Larch & Finn Krüger & Lisandra Flach & Erdal Yalcin & Sebastian Benz, 2013. "Dimensionen und Auswirkungen eines Freihandelsabkommens zwischen der EU und den USA," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 62, October.
    10. 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.

    More about this item

    Keywords

    profitability; imports; exports;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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