Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/205150
Authors: 
Bräuer, Richard
Mertens, Matthias
Slavtchev, Viktor
Year of Publication: 
2019
Series/Report no.: 
IWH Discussion Papers 20/2019
Abstract: 
This study analyses empirically the effects of import competition on firm productivity (TFPQ) using administrative firm-level panel data from German manufacturing. We find that only import competition from high-income countries is associated with positive incentives for firms to invest in productivity improvement, whereas import competition from middle- and low-income countries is not. To rationalise these findings, we further look at the characteristics of imports from the two types of countries and the effects on R&D, employment and sales. We provide evidence that imports from high-income countries are relatively capital-intensive and technologically more sophisticated goods, at which German firms tend to be relatively good. Costly investment in productivity appears feasible reaction to such type of competition and we find no evidence for downscaling. Imports from middle- and low-wage countries are relatively labour-intensive and technologically less sophisticated goods, at which German firms tend to generally be at disadvantage. In this case, there are no incentives to invest in innovation and productivity and firms tend to decline in sales and employment.
Subjects: 
productivity
multi-product firms
import competition
JEL: 
D22
D24
F10
F14
F60
F61
L25
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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