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The Effects of Energy Prices on Firm Competitiveness : Evidence from Chile

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  • Amann,Juergen
  • Grover,Arti Goswami

Abstract

This paper analyzes the impact of changes in energy prices on the competitiveness ofmanufacturing firms in Chile. Using the Chilean Annual National Industrial Survey data, the paper illustrates that,first, increases in energy prices generally do not hurt firm competitiveness. Second, the impact of energy prices dependson the fuel type—while electricity price increases are negatively correlated with firm outcomes, fossil fuel priceincreases have a positive association with investment and firm productivity, a result that is consistent with thestrong version of the Porter hypothesis. Third, these effects are heterogeneous and vary by firm attributes suchas size, ownership and location. Fourth, investigating non-linear patterns in firm outcomes based on the level ofenergy prices, the findings show that the positive correlation between fossil fuel price increases and capitalupgrading is particularly pronounced when energy prices are at relatively low levels.

Suggested Citation

  • Amann,Juergen & Grover,Arti Goswami, 2023. "The Effects of Energy Prices on Firm Competitiveness : Evidence from Chile," Policy Research Working Paper Series 10436, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10436
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