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Low-cost import competition and firm exit: evidence from the EU

Author

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  • Italo Colantone
  • Kristien Coucke
  • Leo Sleuwaegen
Abstract
This article investigates the impact of import competition on firm exit from the manufacturing industries of eight European Union countries. A distinction is made between imports originating from low-cost countries and other imports. While the exit of small firms is high and small firms react strongly to import competition originating from other advanced countries, their exit is not found to be directly affected by imports from low-cost countries. Conversely, the exit rate of larger firms is much smaller in magnitude, but their exit is systematically and positively related to growing imports from low-cost countries. Such empirical evidence is consistent with small and larger firms making up different strategic groups within the same industries, where they face foreign competition of a different nature.

Suggested Citation

  • Italo Colantone & Kristien Coucke & Leo Sleuwaegen, 2015. "Low-cost import competition and firm exit: evidence from the EU," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 24(1), pages 131-161.
    • Handle: RePEc:oup:indcch:v:24:y:2015:i:1:p:131-161.
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    File URL: http://hdl.handle.net/10.1093/icc/dtu008
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    4. Antonia López-Villavicencio & Valérie Mignon, 2021. "On the Seemingly Incompleteness of Exchange Rate Pass-Through to Import Prices: Do Globalization and/or Regional Trade Matter?," Dynamic Modeling and Econometrics in Economics and Finance, in: Gilles Dufrénot & Takashi Matsuki (ed.), Recent Econometric Techniques for Macroeconomic and Financial Data, pages 35-59, Springer.
    5. Alessandro Olper & Daniele Curzi & Valentina Raimondi, 2017. "Imported Intermediate Inputs and Firms’ Productivity Growth: Evidence from the Food Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 280-300, February.
    6. Torreggiani, Sofia & Andreoni, Antonio, 2023. "Rising to the challenge or perish? Chinese import penetration and its impact on growth dynamics of manufacturing firms in South Africa," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 199-212.

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