Imports and Profitability in the Euro Area Manufacturing Sector: The Role of Emerging Market Economies

34 Pages Posted: 11 Aug 2008 Last revised: 12 Aug 2008

See all articles by Tuomas A. Peltonen

Tuomas A. Peltonen

European Central Bank (ECB)

Martin Skala

European Central Bank (ECB) - Directorate General International and European Relations

Alvaro Santos Rivera

European Central Bank (ECB)

Gabor Pula

European Central Bank (ECB) - Directorate General International and European Relations

Date Written: July 10, 2008

Abstract

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.

Keywords: Profitability, import penetration, euro area, emerging markets, globalisation

JEL Classification: L11, L13, F12, C23

Suggested Citation

Peltonen, Tuomas A. and Skala, Martin and Santos Rivera, Alvaro and Pula, Gabor, Imports and Profitability in the Euro Area Manufacturing Sector: The Role of Emerging Market Economies (July 10, 2008). ECB Working Paper No. 918, Available at SSRN: https://ssrn.com/abstract=1157774

Tuomas A. Peltonen (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Martin Skala

European Central Bank (ECB) - Directorate General International and European Relations ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

Alvaro Santos Rivera

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Gabor Pula

European Central Bank (ECB) - Directorate General International and European Relations ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

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