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
Date Written: July 10, 2008
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
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