Exports, Imports and Profitability: First Evidence for Manufacturing Enterprises

34 Pages Posted: 20 Jun 2011

See all articles by Joachim Wagner

Joachim Wagner

University of Lueneburg - Institute of Economics; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics; IZA Institute of Labor Economics

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.

Keywords: exports, imports, profitability

JEL Classification: F14

Suggested Citation

Wagner, Joachim, Exports, Imports and Profitability: First Evidence for Manufacturing Enterprises. IZA Discussion Paper No. 5766, Available at SSRN: https://ssrn.com/abstract=1867035

Joachim Wagner (Contact Author)

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