Author:

Keywords:

globalization, low-cost import competition, firm exit

Abstract:

We investigate the impact of import competition from low-cost countries on the exit of domestic firms from the manufacturing industries of eight European countries. We find a significant positive impact on the exit of large firms, while small firms are not directly affected. The empirical evidence is consistent with small firms having a comparative advantage in terms of flexibility and niche-filling capabilities, on a narrower relevant geographic market.