Working Paper

Globalization and the markups of European firms


  • Békés
  • G.
  • Hornok
  • C.
  • Muraközy
  • B.
Publication Date

We use a unique cross-section survey of manufacturing firms from four European countries (France, Germany, Italy, Spain) linked with balance sheet data to study the relationship between key aspects of globalization and firm-level markups. The main results are: (i) Exporting is positively correlated with markups; (ii) Importing intermediate inputs and outsourcing are also positively correlated with markups; (iii) Firms with affiliates have higher markups than other firms, while simply membership in a group or being foreign-owned seems to be less important; (iv) Perceived competition from low-cost markets is negatively correlated with markups; (v) Higher quality production and innovation, especially if it results in IP, has a strong positive relationship with markups; (vi) While these variables are correlated, they are significant in a joint model including all four groups, and `fully globalized' firms tend to charge around 100% higher markups than non-globalized firms

Kiel Institute Expert


JEL Classification
D22, D24, F14, L11, L60

Key Words

  • exporting
  • FDI
  • importing
  • innovation
  • markups