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Exports and Profitability: first evidence for German manufacturing firms


Fryges, HR and Wagner, J, Exports and Profitability: first evidence for German manufacturing firms, The World Economy, 33, (3) pp. 399-423. ISSN 1467-9701 (2010) [Refereed Article]

Copyright Statement

Copyright 2010 Blackwell Publishing Ltd.

DOI: doi:10.1111/j.1467-9701.2010.01261.x


This paper contributes to the literature by using unique recently released nationally representative high-quality longitudinal data for German enterprises to conduct the first comprehensive empirical study on the relationship between exports and profitability. We document a positive profitability differential of exporters compared to non-exporters that is statistically significant, though rather small, when observed firm characteristics and unobserved firm-specific effects are controlled for. In contrast to nearly all empirical studies on the relationship between productivity and exports we do not find any evidence for selfselection of more profitable firms into export markets. Due to the sampling frame of the data used we cannot test the hypothesis that firms which start exporting perform better in the years after the start than their counterparts which do not start. Instead, we use a newly developed continuous treatment approach and show that exporting improves the profitability almost over the whole range of the export–sales ratio. This means that the usually observed higher productivity of exporters is not completely absorbed by the extra costs of exporting or by higher wages paid by internationally active firms. This evidence presented here for Germany, a leading actor on the world market for manufactured goods, is interesting on its own, and it can serve as a benchmark for future studies using comparable data from other countries.

Item Details

Item Type:Refereed Article
Keywords:exports; firm profitability; Germany; continuous treatment
Research Division:Economics
Research Group:Applied economics
Research Field:Industry economics and industrial organisation
Objective Division:Economic Framework
Objective Group:Microeconomics
Objective Field:Microeconomics not elsewhere classified
UTAS Author:Fryges, HR (Dr Helmut Fryges)
ID Code:85375
Year Published:2010
Web of Science® Times Cited:43
Deposited By:Australian Innovation Research Centre
Deposited On:2013-07-02
Last Modified:2014-04-28

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