Exports, Imports and Profitability:First Evidence for Manufacturing Enterprises

This paper documents for the first time the relationship between profitability and three typesof international trade activities – exports, imports and two-way trade. It uses unique newrepresentative data for manufacturing enterprises from Germany, one of the leading actorson the world market for goods, that merge information from surveys performed by theStatistical Offices and administrative data collected by the Tax Authorities. Descriptivestatistics and regression analysis (with and without controlling for unobserved firmheterogeneity and the role of outliers) point to the absence of any statistically significant andeconomically large effects of trade activities on profits. This demonstrates that anyproductivity advantages of trading firms are eaten up by extra costs related to selling andbuying on foreign markets....