University of Lüneburg Working Paper Series in Economics 373
This paper provides the first empirical evidence on the link between the number of foreign markets (where a market is defined as the combination of one traded good and one country traded with) a firm is active on and its profitability. We find that in German manufacturing industries the profitability of a firm increases when the number of markets a firm exports to or imports from increases. The extra costs associated with being active on more foreign markets tend to be smaller than the extra benefits. It pays to be active on many foreign markets.
Exports Imports Number of foreign markets Profitability Germany