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The Impact of Import Competition from China on Firm-level Productivity Growth in the EU

Author

Listed:
  • Klaus Friesenbichler

    (Austrian Institute of Economic Research (WIFO))

  • Agnes Kügler

    (Austrian Institute of Economic Research (WIFO))

  • Andreas Reinstaller

    (Office of the Austrian Productivity Board)

Abstract

We re-examined the impact of rising imports from China on intra-firm productivity growth in the EU over the period 2005-2016. In contrast to previous studies, we find that an increasing share of Chinese imports in total imports slowed down productivity growth over the observation period. This was particularly the case after the 2008/09 financial crisis and was more pronounced for firms with lower productivity growth. On average, the net effect of China's increasing import intensity on productivity growth has been negative for EU firms since 2010. At the beginning of the sample, firms with median growth experienced a modest growth-enhancing effect, which turned slightly negative in the last observation year. The effect was muted for high-growth multinationals, which experienced a productivity growth premium from Chinese import competition at higher growth rates. Compared to the US, the negative impact of Chinese import competition on the performance of EU firms is visible with a time lag.

Suggested Citation

  • Klaus Friesenbichler & Agnes Kügler & Andreas Reinstaller, 2023. "The Impact of Import Competition from China on Firm-level Productivity Growth in the EU," Research Papers 0323, Büro des Produktivitätsrates.
    • Handle: RePEc:bpr:respap:0323
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    More about this item

    Keywords

    import competition; productivity; manufacturing; EU; China; financial crisis;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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