Has Import Disciplined Swedish Manufacturing Firms in the 1990s?

This paper analyses how increased integration and the ongoing enlargement of European Union’s internal market affected the performance of Swedish manufacturing firms. The pro-competitive effect of international trade, in terms of intensified import competition on domestic firms’ market power, has been investigated extensively at industry level. In contrast to previous studies, this analysis is based on detailed firm-level information. Import data are divided into an EU member group and a group of recently proved EU member candidates. It focuses on how imports from these groups, together with imports from other non-European trading partners, impact on firm profitability, while taking firm-specific efficiency effects into account. The findings are that import from the new EU-candidates seems to have a substantial disciplinary effect on Swedish firm profits, whereas import from EU-member countries only appears to have an impact on firms with large market shares and in highly concentrated industries.