Imports Of Intermediate Inputs Research Articles

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Imports of Intermediate Inputs and Spillover Effects: Evidence from Chilean Plants

This paper uses plant-level data from Chile to examine the determinants of importing intermediate inputs paying special attention to the role of importing spillovers. The results show that plants that pay higher wages and plants with previous experience importing intermediate inputs are more likely to import inputs. This study also finds a positive correlation between the number of importers in the same region, regardless of their industry affiliation, and the probability of importing intermediate inputs. This suggests that importing spillovers may be important, at least in the case of Chilean manufacturing.

The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata

This paper uses affiliate-level data from Swedish multinationals to examine the impact of tax treaties on both overall affiliate sales and the composition of those sales. In line with previous results, we find little evidence for an effect of treaties on the level of total sales. We do, however, find that a tax treaty increases the probability of investment by a firm in a given country. In addition, we find that a treaty reduces exports to the parent but increases imports of intermediate inputs from the parent. This is consistent with treaties increasing the effective host tax. This suggests that tax treaties impact the behaviour of multinationals along some dimensions but not along others.

The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata

This paper uses affiliate‐level data from Swedish multinationals to examine the impact of tax treaties on both overall affiliate sales and the composition of those sales. In line with previous results, we find little evidence for an effect of treaties on the level of total sales. We do, however, find that a tax treaty increases the probability of investment by a firm in a given country. In addition, we find that a treaty reduces exports to the parent but increases imports of intermediate inputs from the parent. This is consistent with treaties increasing the effective host tax. This suggests that tax treaties impact the behaviour of multinationals along some dimensions but not along others.

Imported Intermediate Inputs and Domestic Product Growth: Evidence from India

New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from India to investigate the relationship between declines in trade costs, imports of intermediate inputs, and domestic firm product scope. We estimate substantial gains from trade through access to new imported inputs. Moreover, we find that lower input tariffs account on average for 31% of the new products introduced by domestic firms. This effect is driven to a large extent by increased firm access to new input varieties that were unavailable prior to the trade liberalization.

Estimating Dynamic Impacts of the Seafood Industry in Alaska

This study estimates the dynamic impacts of the seafood industry and investigates multivariate relationships between basic and nonbasic sectors. The study regions are two fishery-dependent regions in Alaska, which are heavily dependent on extra-regional inputs such as non-resident labor and imports of intermediate inputs. This study follows Johansen's approach and develops a vector autoregressive error correction model, which has the advantage of properly attributing the impact of shocks, directly estimating long-run relationships, and identifying the process of adjustment by nonbasic sectors to the long-run equilibrium. Results show that the impacts of the seafood industry are relatively small in the two study regions, whose economies are characterized by large leakages of labor income and large imports of inputs.

Land inequality and the transition to modern growth

Can the initial distribution of land, in a country's early history, affect its subsequent economic development? In this paper, I show that when land ownership is sufficiently concentrated, the landed elite will lobby the government to raise barriers to industrialization in order to protect its rents in the rural economy. I develop a small open economy model in which barriers take the form of tariffs on the imports of intermediate inputs used in industry. Such tariffs can affect both the timing and the pace of industrialization. The quantitative application of the theory is motivated by an important question in economic history: why did Argentina not replicate Canadian economic success, despite reasonable expectations to the contrary in the late 19th century? I provide evidence that Argentina had a markedly higher inequality in land ownership than Canada. Taking as given the observed differences in land distributions in the early 20th century, the model produces differences in equilibrium tariffs similar to the ones observed at the time, and the ones required to account for the Canadian–Argentine income gap until 1950. Over time however, as land becomes unimportant in production, land inequality ceases to be a source of policy disparities and income gaps.

Employment, skill structure and international trade: Firm-level evidence for France

We use the French Customs files, an exhaustive account of the international trade transactions carried out by firms across the period 1986–1992, to analyze the link between imports, exports, employment, and skill structure of French manufacturing firms. Our data allow us to distinguish between imports of finished goods and imports of intermediate inputs. Our results show that there is a strong correlation between increasing imports, in particular imports of finished goods, and job destruction, most notably destruction of production jobs. Interestingly, the strength of the relation between job destruction and imports is stronger for larger firms. For example, within production jobs, the association between increasing imports of finished goods and destruction of unskilled jobs is only found in large firms. These findings are robust to the introduction of firm-level measures of innovation.

Imports of intermediate inputs and plant survival

Previous studies have analyzed the effect of exporting on plant survival. No work has been done examining the role of importing intermediate inputs on survival. Using plant-level data from Chile we find that importing intermediate inputs increases the probability of survival.

Foreign exchange bottlenecks, devaluation and inflation

Devaluation is unambiguously deflationary when foreign exchange earned by the export sector pays for additional imports of intermediate inputs and the criterion for a foreign exchange bottleneck is satisfied.

Determinants of the Export Structure of Countries in Central and Eastern Europe

The growth in exports from Central and Eastern Europe to Western markets suggests that entrepreneurs have responded to changed incentives by restructuring their production to capture new markets. The absence of change in the structure of exports, however, suggests that these restructuring efforts have not been significant. This article analyzes the magnitude of the change in export structure across the Central and Eastern European countries in 1990–95, focusing in particular on trade with the European Union. It finds that imports of intermediate inputs and machinery are an important determinant of the changes in export structure. Sourcing of inputs from abroad is a major factor underlying the expansion of exports to the European Union. Outward processing (subcontracting) arrangements and foreign direct investment have a smaller impact. Except for Poland, inflows of foreign direct investment are statistically insignificant or negatively associated with measures of revealed comparative advantage. This suggests that foreign investors have chosen sectors in which the Central and Eastern European countries were not relatively specialized under central planning.

Asean and EC-1992

ASEAN, the Association of South East Asian Nations, comprises the fastest growing countries of the world economy. Apart from including the only NIE (newly industrialising economy), not having encountered domestic political or social growth constraints—Singapore, with 11 per cent real growth in 1988, 9.2 per cent in 1989 and 10 per cent, first quarter 1990—it consists of recent record holder Thailand (with growth rates above 10 per cent for three years), Malaysia (growth in the 7 per cent—9 per cent range), Indonesia (recent growth 6–7 per cent), Philippines (oscillating growth due to internal instability) and Brunei (an oil-exporting sultanate). The ASEAN countries do not owe their growth to the integration of ASEAN countries into a free trade area, a customs union or a common market. Intra-group trade liberalisation and economic cooperation are still modest. These growth marvels owe their performance to exports, especially to the OECD countries. The quality and very high growth rates of exports were and still are fostered by foreign investment and imports of intermediate inputs from the target markets.

The Effects of Aggregation on Estimated Import Price Elasticities: The Role of Imported Intermediate Inputs

This paper examines how one response of domestic producers to an exogenous change in relative prices may reduce estimates of import price elasticities made for aggregate classifications of imports. This response occurs as follows: A reduction in the relative price of an imported good would decrease demand for the domestically produced substitute. The consequent reduction in production of this substitute would cause reduced imports of intermediate inputs used in its production, even though the relative prices of these inputs remain unchanged. Similarly, an increase in the relative price of an imported good would cause increased imports of intermediate inputs used in production of the domestic substitute. We term these effects on imports of intermediate inputs effects. To the extent that imported goods and intermediate inputs used in production of their domestic substitutes are in the same aggregate classification, output effects will reduce the net changes in imports that accompany relative price changes for this aggregate, and hence will reduce the estimated import price elasticity. If some goods in the aggregate classification are exported, changes in exports due to relative price changes for the aggregate may also cause output effects that would act to reduce the estimated import price elasticity. Clearly, the importance of output effects for estimated elasticities depends upon the level of aggregation used in the estimation and on the input-output structure of the importing country. As a case study, we estimate the magnitude of output effects for import price elasticities estimated for Canada, using the aggregate classifications shown in table 1. We show that output effects provide an important additional reason beside those given by Orcutt (1954) as to why aggregation may reduce estimated import price elasticities.' Our results thus illustrate the magnitude of the bias caused by output effects when elasticities estimated for aggregate classifications of goods are used to predict the effects of a change in relative prices on imports of more disaggregate classifications. Our results also indicate the degree to which a general equilibrium model may understate the effects on trade of exogenous changes in relative prices (such as tariff cuts or depreciation) if estimated import price elasticities are used and the model explicitly accounts for output effects.2 The understatement occurs because estimated elasticities are likely to account for some output effects, and these output effects would be double-counted. Although our analysis is presented in terms of partial elasticities, it also applies to what are called total or semi-total elasticities.3 The next section presents the model used to estimate the influence of output effects on estimated import price elasticities. In section III, the model is estimated. Concluding remarks are presented in section IV.

Trade creation, trade diversion and effective protection in the central American common market

Aggregate analyses suggest that the formation of the Central American Common Market (CACM) has resulted in little or no trade diversion, but different conclusions apply when the import data are appropriately disaggregated. Increases in the effective rates of protection for consumer goods have led to increased demand for extra‐regional imports of intermediate inputs and decreased demand for extra‐regional imports of final goods. On balance, the CACM is a trade‐diverting customs union for non‐durable consumer goods: trade‐creating effects are present in Honduras and Costa Rica, but trade‐diverting effects dominate in Guatemala, El Salvador and Nicaragua.