The impact of higher utility costs on firm performance in the manufacturing sector: the case of an emerging economy

Using a panel of Romanian firms in the manufacturing sector between 2010 and 2019, this paper assesses the impact of utility costs (electricity, gas, water and waste) increases on the economic performance of firms (in terms of employment, exports and productivity). By means of static (fixed effects) and dynamic (GMM) specifications, it finds a relatively moderate, yet negative impact in the case of all variables, under a variety of specifications. Energy costs seem to have a larger contemporaneous effect, which suggests that firms might in the longer-run switch to less energy intensive production processes. Moreover, the more energy intensive sectors are generally also the most impacted in terms of employment and productivity.