Imported inputs and productivity (original) (raw)
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How do imports affect firm productivity? To answer this question, we estimate a structural model of importers using a panel of Hungarian firms. In our model with heterogenous goods, imported inputs improve productivity because (1) they are imperfect substitutes of domestic inputs; and (2) they have higher quality. This model yields a production function where output depends both on conventional factors and the number of product varieties imported. We estimate this import-augmented production function with the Olley and Pakes (1996) procedure, and find that increasing the fraction of product varieties imported from 0 to 100 percent leads to a productivity gain of 14 percent. About two thirds of this gain can be attributed to imperfect substitution, while the remainder is due to the higher quality of imports. We also compute the effects of a hypothetical tariff cut, and find that for small firms, it improves productivity through importing more product varieties, while for large firms it improves productivity through increasing existing imports.
Direct Foreign Investments and Productivity Growth in Hungarian Firms, 1992-1999
SSRN Electronic Journal, 2001
The impact of FDI on total factor productivity in Hungary during the 1990s' is assessed with a large enterprise panel. Foreign equity is associated with higher productivity levels and has a substantial, positive spillover effect on aggregate TFP growth. However, this benefit is significant only when associated with export orientation, while inward-looking FDI has negative side effects. Regionally, the northwestern area, close to EU borders, benefits much more from FDI, whether foreign-owned or locally-owned private firms are considered. Otherwise, only the later absorb a reduced volume of externalities. Finally, State ownership implies lower levels of productivity, but does not hinder the capacity to respond to market incentives, including FDI induced externalities.
Estimating the Productivity Selection and Spillover Eects of Imports
Economists emphasize two channels through which import liberalization aects productivity, one operating between and the other within …rms. According to the for- mer, import competition triggers market share reallocations between domestic …rms with dierent technological capabilities (selection). At the same time, imports can also improve …rms'technologies through learning externalities (spillovers). We present evidence for a sample of industrialized countries over the period 1973 to 2002. First, in the long run, import liberalization lowers productivity in domestic industries through selection. This …nding con…rms the prediction of models with …rm heterogeneity, in- cluding Melitz and Ottaviano (2008), in which unilateral liberalization lowers the pro…ts of domestic relative to foreign exporters. Second, if imports involve advanced foreign technologies, liberalization also generates technological learning that can on net raise domestic productivity. Third, for short time horizon...
Imported inputs play an important role in the productivity and export performance of the manufacturing industries of India. This article of Chandan Sharma states the impact of imported inputs in the growth of export of one's country. The purpose of this study is to let us know the outcome of imported intermediate inputs to export. This issue is also important in countries that pursuing an export-oriented trade policy. Developing countries can use imported goods as a source of learning to innovate activities in their industries. It is essential that a firm knows the effect of such inputs in their productivity and its contribution to the economy. Knowing that imported inputs are crucial determinants of growth models is an advantage to firms. Firms gain from international trade. The gain for firms from importing could be static and dynamic (Coe and Helpman 1995). The argument stated is the effect of imported inputs in the productivity and export performance. An increase in the productivity and exports is the result of these imported inputs. It obtains new technologies that enhance industrial productivity. Endogenous Growth Theory emphasizes the important role of importing new varieties of inputs. It is shown in the theoretical literature that new varieties of inputs lead to a significant productivity improvement of firms, both in the short as well as in the medium term (RiveraBatiz and Romer 1991). A growing body of theoretical work, well supported by empirical studies in international economics, suggests that foreign trade has large positive effects on income, output and productivity (Romer 1987; Coe and Helpman 1995; Barro 1997; and Frankel and Romer 1999). Export performance rise because of imports. Muûls and Pisu (2009) and Altomonte and Bekes (2009) have suggested that the productivity premium of exporting firms is due to the fact that they are also importing. Furthermore, importing new and more advanced technology inputs enhances productivity, making firms more competitive in export markets (Halpern et al 2015). To test the effect of imported inputs, two empirical models have been tested. The first model is to test the effects of imported inputs on the productivity (TFP) of industries, while the second model examines the effects on export performance of Indian manufacturing industries. The results on the first model suggest that imported inputs are a determinant of total factor productivity (TFP), as the elasticity is estimated to be around 0.07, which indicates that a 1%
Firms and products in international trade: Evidence from Hungary
Economic Systems, 2011
described the patterns of international trade at the firm level. Research based on firm-level data resulted in discovering an important empirical regularity: the exceptional performance of exporting and importing firms and the importance of firm heterogeneity (see . This paper follows this strain of literature by examining firm-level heterogeneity and its relationship with trading activity. For this purpose we use detailed firm-and product-level data from Hungary. The IEHAS-CEFiG Hungary dataset connects the balance sheet data of firms for the period 1992-2003 with a firm-product-country panel of manufacturing export and import observations. This small open economy has been through fast restructuring and trade liberalisation since the economic transition. As the 1992-2003 period witnesses Hungary's rapid trade integration into the European single market, these data may be especially suitable to study the firm-level effects of trade liberalisation. Manufacturing plays a dominant role in both import and export activity by volume and is more directly related to trade theories based on firm heterogeneity, therefore this discussion focuses on the manufacturing sector, which also makes our results more comparable with evidence from other countries.
Does importing more inputs raise productivity and exports? Some evidence from Indian manufacturing
This study aims to analyse the role of imported inputs on productivity and export performance of the manufacturing industries of India. Our results indicate that imported inputs are crucial determinates of Total Factor Productivity (TFP). However, the impact varies greatly across industries. Furthermore, results regarding research and development (R&D) intensity suggest that inhouse R&D activities do not play a significant role in the productivity performance of Indian manufacturing firms. Our results also indicate that imports lead to a substantial growth in exports. In particular, exports in the chemical, machinery and transport equipment industries are highly dependent on imported intermediate goods. The results also indicate that although R&D is not linked with the productivity of industries, it has an important role in the export performance of these industries. TFP is also estimated to have a significant and sizable impact on export performance. This, in turn, supports the self-selection hypothesis, which explains the self-selection of more productive firms into the export market. Overall, our results support both hypotheses: learning by importing and self-selection in the import market.
Sectoral productivity in Hungarian economy: an input-output linkages approach
Journal of Eastern European and Central Asian Research (JEECAR), 2019
With the pace of economic development, many changes exist on production and consumption side. The study attempts to re-investigate the production structure change in Hungarian economy by ranking sectors. We used the latest input-output table for 2011 available by OECD. The study employed the Leontief model for demand side for forward linkages indices, while supply side for backward linkages indices to examine the ranking sectors structure changes. Findings has shown that on demand and supply side key sectors stand as prominent sectors such as manufacturing, metals, wholesale and retail trade and telecommunications. New evidence is found that Hungary economy need to have careful planning in order to attract FDI as hub of investment. There is also utmost importance to promote education to have human capital in order to meet long term challenges. Lastly, country still have high global competitiveness which shed light on its new economic policies as readiness towards technical innovati...
New Lessons from an Old Strategy: Import Substitution, Productivity and Competitiveness
2015
This paper examines the relation between import substitution, labour productivity and industrial competitiveness. More specifically this paper tests if the import substitution enhances both labour productivity and competitiveness in Korean and Turkish manufacturing industries. The data used in the analysis are obtained from UNIDO Industrial Demand Supply (2013) and UNIDO Industrial Statistics (2013) databases and cover the period of 1981-2001. Our results show that Turkish economy has really left import substitution after 1980. However, we found significant share of import substitution in total production in professional and scientific equipment, transportation equipment, electrical machinery, miscellaneous petroleum products, industrial chemicals industries and petroleum refineries in Korea especially in the 1990s. The results based on unbalanced dynamic panel data estimations showed that import substitution did not enhance labour productivity in manufacturing industry of both Korea and Turkey. However, we found that import substitution affects industrial competitiveness positively in both Korea and Turkey. Apart from the positive impact of import substitution on competitiveness , we also found in this study that while Korean manufacturing industry competitiveness is closely associated with labour productivity, competitiveness of Turkish manufacturing industry depends on the factors such as exchange rates, wage differentials rather than labour productivity.
Productivity and the decision to import and export: Theory and evidence
Journal of International Economics, 2013
This paper develops an open economy model with heterogeneous final goods producers who simultaneously choose whether to export their goods and whether to use imported intermediates. The model highlights mechanisms whereby import policies affect aggregate productivity, resource allocation, and industry export activity along both the extensive and intensive margins. Using the theoretical model, we develop and estimate a structural empirical model that incorporates heterogeneity in productivity and shipping costs using Chilean plantlevel data for a set of manufacturing industries. The estimated model is consistent with the key features of the data regarding productivity, exporting, and importing. We perform a variety of counterfactual experiments to assess quantitatively the positive and normative effects of barriers to trade in import and export markets. These experiments suggest that there are substantial aggregate productivity and welfare gains due to trade. Furthermore, because of import and export complementarities, policies which inhibit the importation of foreign intermediates can have a large adverse effect on the exportation of final goods.
The Impact of Input and Output Tariffs on Firms' Productivity: Theory and Evidencer oie_988 821..835
This paper studies the impact of trade liberalization on productivity. It shows that when intermediate inputs are not highly differentiated, lowering input tariffs leads to a rise in within-firm productivity and wages, and lowering output tariffs has the opposite effect. When intermediate inputs are highly differentiated, the conclusions reverse. These predictions are supported by the data, given by the industrial survey from INEGI (Mexico's Insitituto Nacional de Estadistica Geografia e Informacion) in the period 1984–90. The paper yields estimates for the elasticity of substitution among intermediate inputs, which are useful in determining the direction of the impact of trade liberalization. These estimates can be used to assess the gains from trade liberalization.