International competition, protectionist measures and their impact on Austrian firms

Autor: Manuel Gruber‐Német
Report 01/2025

The aim of this study is to assess the impact of two distinct but interrelated challenges for Austrian firms resulting from Austria’s integration in global trade. In particular, it provides micro‐empirical evidence on the extent to which Austrian firms were affected by the increase in Chinese competition over the last decade and by the U.S. trade policy actions during U.S. President Trump’s first term. Fur‐ thermore, this paper attempts to characterize how Austrian firms have reacted to these challenges from abroad. The results indicate that Austrian firms have demonstrated considerable robustness in the face of these recent challenges. Neither increased Chinese competition nor the U.S. tariffs introduced in 2018 exhibited significantly negative effects on employment, labor productivity and aggregate exports of Austrian firms. Increases in Chinese competition did, however, to a small ex‐ tent, induce structural change via changes in specialization among continuing firms and market exit of some of the least productive firms. Within firms I find that increasing Chinese competition discour‐ ages R&D spending while protectionist measures in export destinations discourage large investments, which may undermine the ability of Austrian firms to withstand foreign competition and protectionist trade policy in the future.

Zitiervorschlag: Gruber-Német M. (2025). International competition, protectionist measures and their impact on Austrian firms. Report 01/2025, Büro des Produktivitätsrates, Wien.

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