The Impact of Import Competition from China on Firm Performance in the Peruvian Manufacturing Sector

Eduardo Mercado, Martha Denisse Pierola and Dennis Sánchez-Navarro

No 10036, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper studies the impact that import competition from China had on firms performance in the manufacturing sector in Peru in 20052015. Using a firm-level dataset that covers the universe of firms in the formal sector, our results reveal that Peruvian firms reacted to increased competition from Chinese manufacturing goods mainly by altering their factor choices. Smaller firms seem to have opted for reducing their demand for laborfollowing a cost-reduction approach after facing lower saleswhile larger firms seem to have adapted by deepening their capital requirements. We also observe a negative cumulative impact on net sales when we account for longer timeframes. Looking at import competition from China in third markets, we find that increased competition in the Peruvian exporting firms main export markets had a negative effect on employment growth in 20052010.

Keywords: import competition; employment growth; capital intensity; export growth; productivity growth; export competition (search for similar items in EconPapers)
JEL-codes: F14 F16 J23 (search for similar items in EconPapers)
Date: 2019-12
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:10036

DOI: 10.18235/0002079

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