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Determinants of Firm Profitability in Colombia’s Manufacturing Sector :, Exchange Rate or Structural?, Naomi Griffin

The appreciation of the real exchange rate over the past several years is considered one of the key drivers behind the weak performance of Colombia’s manufacturing sector in recent years. This paper examines the effects of the real exchange rate, external and domestic demand, and structural changes on firms’ profitability in Colombia’s manufacturing sector between 2000 and 2012. While export intensive companies have suffered lower profit growth with real exchange rate appreciation,we find no strong evidence that real appreciation has, on average, negatively affected the profitability of manufacturing firms; on the contrary, we find that real appreciation may have increased firms’ profitability by reducing the cost of imported inputs as Colombian manufacturing firms become more domestically oriented. At the same time, some structural changes (related to trade disruption with Venezuela and increased trade competition from China) seem to partially explain the weakness of the manufacturing sector since 2008
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; Tables; I. Introduction; II. Aggregate Trend of Real Exchange Rate and Trade; A. Data and Methodology; B. Real Effective Exchange Rate and External Demand; C. Structural Changes Related to International Trade; D. International Comparison; III. Firm-level Analysis; A. Theoretical Model; B. Data and Empirical Specification; C. Results; 1. OLS Panel Regression Results on Profit Growth, 2000-2012; 2. OLS Panel Regression Results on External Revenue Growth, 2000-2012; 3. OLS Panel Regression Results, 2000-2012
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (45 p.)
Specific Material Designation
Form Of Item

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