Imports Of Intermediate Goods Research Articles

Currency overvaluation and export product quality: Evidence from China

Based on Chinese industrial firm information and international transaction data from 2003 to 2013, we construct a currency overvaluation index across 297 cities in China. Using the innovative index, we present that currency overvaluation significantly promotes export product quality of Chinese manufacturing enterprises, which is conceivably due to increased import of intermediate goods. Heterogeneity analysis reveals that the impact is more pronounced for medium-sized firms, domestic invested firms, and firms in non-mega cities. By investigating the driving forces of export product quality improvement, we provide clear policy implications for government and firms pursuing long-term development.

Imported Inputs, Balance of Payments and Economic Growth: a model and a test on the case of Turkey

Several countries rely heavily on imported intermediate inputs for the manufacturing of their exported goods. Understanding the implications of this reliance on a country's growth performance is vital. To address this issue, we conducted an in-depth analysis using the multi-sectoral balance-of-payments constrained growth model with data from Turkey spanning 1970 to 2019. We used the autoregressive distributed lag method to estimate sectoral export, final import, intermediate goods import, and total import demand functions for five technology-based sectors. Subsequently, we calculated growth rates using the multi-sectoral balance of payments constrained growth models, factoring in the estimated income and price elasticities, as well as the respective sectoral shares in total exports, total imports, total final imports, and total intermediate goods imports. Our results demonstrate that the multi-sectoral balance of payments constrained growth model, which incorporates the impact of imported intermediate goods, successfully predicts Turkey's growth path. The findings indicate that structural changes in the production process and the use of imported intermediate inputs have a positive impact on exports. However, Turkey's significant dependence on imported intermediate goods during the production process leads to a decrease in the multi-sectoral balance of payments constrained growth rate.

Does Trade Policy Uncertainty Affect Firms' Imported Intermediates?

Abstract In recent years, the rise of trade protectionism and the intensifying trend of deglobalization worldwide have led to an annual increase in trade policy uncertainty faced by Chinese companies in international trade. This uncertainty may impact the import of intermediate goods by these companies. The import of intermediate goods is closely related to various aspects of a company's operations, such as productivity, mark-up rates, and innovation. Therefore, examining the impact and mechanisms of trade policy uncertainty on the import of intermediate goods by companies is of significant importance. This paper uses data from the 2001-2009 China Industrial Enterprise Database, China Customs Import and Export Database, and the World Bank's WITS database to calculate the trade policy uncertainty index for Chinese companies and test theoretical hypotheses. Empirical results show that when trade policy uncertainty increases, there is a decrease in both the amount and range of intermediate goods imported by companies, while the growth rate of intermediate goods import value increases. The mediating effect indicates that trade policy uncertainty affects companies' intermediate goods procurement strategies by reducing their production and business scale. Additionally, heterogeneity analysis finds that trade policy uncertainty has different impacts on companies with various intermediate goods import strategies. Keywords: Trade Policy Uncertainty, Import, Intermediates, Business Scale.

Supply Chain Interconnectedness in Times of Crises: A Gravity Model with DiD Analysis of COVID-19 Effects on Central and Eastern European Trade

This paper explores the impact of COVID-19-induced disruptions on supply chains, specifically focusing on the interconnectedness of supply chains and the transmission effects they cause. The gravity model framework, together with difference-in-differences analysis, is employed to analyze monthly trade patterns among Central and Eastern European (CEE) countries, Western European countries, and other trading partner countries. The model presented accounts for the country’s roles in global value chains (GVCs) by incorporating data related to exports, imports of intermediate and capital goods, and imports of final consumption goods. CEE countries have demonstrated a certain resilience during the COVID-19 pandemic. Yet, they were not immune to adverse consequences due to disrupted supply chains, primarily in the imports of intermediate and capital goods. We find that the countries that suffered from the COVID-19 pandemic the least demonstrated remarkable resilience against disrupted GVCs. The findings of our study enrich the literature on the effects of the COVID-19 pandemic, specifically for the CEE region, by providing a framework for understanding the pandemic’s impact on international trade. The results show that supply shock might be greater than demand shocks on production and trade dynamics. Furthermore, our results suggest that policymakers seek adaptability to changing supply and demand patterns, while enterprises should consider broader diversification both within the region and locally.

Impact of the US-China Trade War on Foreign Trade of Emerging Economies: Brazil, South Africa, and Indonesia

The study analyses the potential impacts of the US-China trade war on the foreign trade of emerging economies, i.e., Indonesia, Brazil, and South Africa, and their foreign economic policies to obtain alternative markets outside the US and China. These countries were chosen because they have similar industrial characteristics and robust commercial relationships with the US and China. This study uses desk review approach and secondary data analysis from the International Trade Center (ITC) Database, the WTO Tariff Database, and the Peterson Institute of International Economics (PIIE). The impacts were portrayed in several views: triangular trade structure, global value chain, China+1, and Global South relationship. In the context of a triangular trade structure with China as the mediator, Indonesia’s and Brazil's trade was relatively secure since they exported considerable natural resources to China. At the same time, they could maintain positive trade performance with the US and China owing to the global value chain. South Africa has extensive imports of intermediate goods from the US and China, mainly for the automotive sector and further processed for the African market. However, since the significant position of the US as a trading partner, Indonesia, Brazil, and South Africa were potentially exposed to protectionism behavior. Indonesia benefits significantly from the US General System Preferences (GSP) trade facilities for developing countries. The consistent trade surplus has raised critical concerns from the US government regarding Indonesian exports. Therefore, the escalation has also enhanced cooperation in the Global South, including the Brazil-led Mercosur free trade negotiation with Singapore and Indonesia's preferential trade agreement with Pakistan and Bangladesh.

Intermediate Goods–Skill Complementarity

Abstract Recent research has begun to imply intermediate goods–skill complementarity; however, this possible complementarity has been hypothesized but not statistically tested, despite the increasing importance of intermediate goods in production. This study provides statistical evidence regarding whether intermediate goods are more complementary with skilled labor than with unskilled labor. Using panel data from 40 countries over the period 1995–2009, we estimate a two-level constant elasticity of substitution (CES) production function. Our major findings are fivefold. First, at the aggregated one-sector level, the elasticity of substitution between intermediate goods and unskilled labor is 1.22, which is significantly greater than that between intermediate goods and skilled labor of 1.05, indicating intermediate goods–skill complementarity. Second, at the disaggregated level, such complementarity is primarily observed in heavy manufacturing industries and the service sector, whereas complementarity is observed between intermediate goods and unskilled labor in the primary sector and light manufacturing industries. Third, the normalization of the data and the cumulant estimators exhibit stronger results. Fourth, our baseline results are confirmed applying several robustness checks, such as switching skilled and unskilled labor or considering capital–skill complementarity. Finally, intermediate goods–skill complementarity tends to be higher for industries that use more imported intermediate goods.

Dissecting the impact of imports from low-wage countries on inflation

Using micro data on import values and quantities by product and countries of origin, we quantify the effect of imports from low-wage countries (LWCs) on inflation in France from 1994 to 2014. Imports of varieties produced in LWCs affect the cost-of-living price index through pure-price and taste-shock variations (which, conditional on prices, drive expenditure shares). The pure-price effect includes both the contribution of imported inflation (given the share of imports in consumption) and the effect of imports of intermediate goods from LWCs on domestic prices. Taste shocks cannot be directly observed but are recovered from expenditure shares and relative prices, using estimated values for the elasticity of substitution. We derive an expression of inflation that allows us to disentangle the impact of imports of consumption goods from LWCs on cost-of-living versus CPI inflation — the latter abstracting for composition effects. Overall, we estimate that imports from LWCs lowered CPI inflation by 0.02 pp per year on average, and had a much larger effect on cost-of-living inflation (between 0.13 to 0.20 pp per year depending on how we measure unit values).

Trade with innovation benefits: A re-appraisal using micro data from China

In recent years, the impact of international trade on firm innovation has received increasing attention. Some scholars argue that knowledge spillovers from trade are beneficial to innovation, while others argue that the intense competition from trade leads to a reduction in innovative activity, based on the Schumpeterian effect. To address this issue, we creatively construct a dataset of Chinese listed firms from 2000 to 2014 and conduct empirical tests using propensity score matching to investigate the impact of firms' intermediate goods import behavior on innovation performance at the micro level. We construct models of firms' decisions under closed market conditions and of the impact of intermediate goods imports on firms' innovation activities under open market conditions. Our study shows that firms that import intermediate goods are more innovative, and we validate the robustness of this result. We further discuss the potential mechanisms of how exposure to international markets affects innovation, and we find that firms' import behavior affects innovation through scale effect, technology effect, and profit effect. In short, importing intermediate goods enhances firm-level innovation in developing countries. Our study provides significant evidence on the impact of imports on firm-level innovation performance, and our findings provide a rationale for promoting the co-development of trade and firm innovation. This paper also has important policy implications that governments should continue to reduce trade barriers, promote trade openness, and enhance technology transfer and cooperation in order to reap more innovation benefits from trade.

Assessing the impact of intermediate import liberalization on green innovation in pollution-prone industries: A study on publicly traded companies

Against the backdrop of mounting concerns about the environmental degradation stemming from heavily polluting industries in China's manufacturing sector, this study aims to investigate the effects of intermediate import liberalization during the period 2000–2016 on green innovation. By examining this relationship, the study seeks to provide valuable insights into potential strategies for fostering sustainable development and promoting environmentally friendly practices within the sector. This study underscores the significant and positive impact of intermediate import liberalization on the green innovation of listed companies operating in heavily polluted industries. Our benchmark regression analysis demonstrates this influence. Notably, this effect is particularly pronounced for state-owned enterprises and those with high import intensity. Additionally, the study reveals that the beneficial impact of intermediate goods import liberalization on green innovation is evident primarily in high-tech industries and within the eastern region. These findings underscore the essential role played by positive spillover effects and competition in shaping the influence of intermediate import liberalization on environmentally conscious innovation. Furthermore, this study emphasizes the importance of both countries and enterprises leveraging the benefits derived from the liberalization of intermediate goods imports. Firms should proactively seek advanced foreign knowledge and technology, while actively engaging in market competition to drive their own green innovation and expedite the process of transitioning to environmentally sustainable practices. These findings have significant policy implications for enhancing green innovation in the manufacturing sector and promoting sustainable development.

How does the import of environmental intermediate goods affect CO2 emissions? theoretical and empirical research of prefecture-level cities of China.

This paper constructs a theoretical model of biased production decisions due to the import of environmental intermediate goods. Additionally, it analyzes the influence of these imports on CO2 emissions based on the trade and CO2 emission data of Chinese prefecture-level cities from 2000 to 2016. Furthermore, it empirically explores how environmental intermediate imports affect CO2 emissions. The study found the following: first, the import of environmental intermediate goods can effectively reduce CO2 emissions; this conclusion still holds under robustness and endogeneity tests. Second, the carbon emission reduction effect related to the import of environmental intermediate goods is affected by differences in geographical location, environmental pollution, sustainable development ability and government efficiency. Third, the mechanism test found that the import of environmental intermediate goods exerts emission reduction effects through the green technological innovation and industrial structure upgrading mechanisms. The conclusions of the research in this article provide a reference for coordinating trade development and environmental protection.

Preferential Trade Agreements and Productivity: Evidence from Peru

This paper analyzes the impact of reducing output tariffs (i.e., domestic tariffs on import of final goods) and input tariffs (i.e., domestic tariffs on imports of intermediate goods) on total factor productivity growth of Peruvian manufacturing firms. Peru’s annual survey of manufacturing data from 2003–2017 is used to explore the reduction of tariffs during three preferential trade agreements: United States, China, and the European Union. Lower output tari˙s could decrease productivity by reducing firm’s market share or could increase productivity by inducing tougher import competition, while cheaper imported inputs can raise productivity via learning, variety, and quality effects. The results show that a decrease in output tariffs decreases Peruvian firms’ productivity growth for non-exporters (i.e., domestic firms producing goods that are also imported) while increasing productivity growth for exporters (i.e., domestic firms producing export goods). In contrast, a reduction in input tariffs increases firm productivity for all firms.

IMPACT OF IMPORTED INTERMEDIATE GOODS ON ENERGY-ENVIRONMENTAL EFFICIENCY: FIRM-LEVEL EVIDENCE FROM CHINA

Improving energy-environmental efficiency (EEE) is an important way to achieve China’s carbon peak, carbon-neutral goals and green transformational development. The scale of imports of intermediate goods has been increasing rapidly with the deepening of China’s opening up to the outside world, which has played a positive role in promoting high-quality development. Considering that enterprises are the main players in transforming energy consumption patterns and high-quality development, we investigated the impact of imported intermediate goods on EEE from a microfield perspective. The empirical results showed that imported intermediate goods significantly contributed to EEE and that firms’ innovation capacity and productivity are the corresponding influencing mechanisms. The effects of importing intermediate goods in foreign-invested enterprises, enterprises in the eastern and coastal regions and capital-intensive enterprises are more obvious in improving EEE. Further expansion of imports of intermediate goods, enhancement of enterprises’ capacity for independent innovation, deepening structural reforms and accelerated development of the digital economy can help enhance the promotional effect of imports of intermediate goods on enterprises’ EEE.

Research on Embedded Technology Import and the Growth of TFP in China's Manufacturing Industry Based on the Panel Data from 1992 to 2020

In the past few decades, the import of embodied technologies, mainly the import of capital goods and intermediate goods, has met the needs of industrial structure upgrading and export expansion. This paper uses the DEA-Malmquist method to measure the total factor productivity and its decomposition value of 26 manufacturing industries in China from 1992 to 2020, and uses a fixed effect model to empirically analyze the impact of embedded technology imports on China's manufacturing total factor productivity. The results show that the import of embedded technology has a positive effect on the total factor productivity of the manufacturing industry and technological advancement, while the impact on technical efficiency is not significant. After classifying the manufacturing industry according to the technical level, it is found that the import of embedded technology significantly improves the total factor productivity of low-tech and medium-tech manufacturing, while the impact on resource-based manufactured goods and high-tech manufactured goods is not significant. Finally, this paper gives policy recommendations based on the empirical results.

A Study of the Effects of China’s TBT Notifications on Korean Exports

Since China joined the World Trade Organization (WTO) in 2002, the number of technical barriers to trade (TBT) notifications has increased rapidly. This study investigates the impact of China’s imposition of TBTs on the exports of Korean manufacturing-industry from 2002 to 2014. We focus on the following aspects: exports in terms of value-added, a comparison of exports of final goods with exports of intermediate goods, and specific trade concerns (STCs). Our findings are as follows. First, China’s TBTs have an insignificant impact on Korean manufacturing exports to China when we investigate the whole manufacturing industry sector. Second, as a result of analyzing final goods and intermediate goods separately, we do not find a significant effect of TBTs on the export of intermediate goods, whereas they have negative effects on the export of final goods. This is in line with our expectations that China does not want to restrict the import of intermediate goods. Third, further analysis of the relationship between exports and TBT STCs is conducted. However, we find no additional negative effect of TBT STCs on exports. Fourth, the impact of TBTs on exports in value-added terms does not seem to differ from the impact on total gross exports.

대만과 주요 국가간 경제적 상호파급효과 분석

In this study, Taiwan’s dependence on China for the import and export of intermediate goods was found to be at a very high level. It shows the necessity for Taiwan to reduce the dependence on China in supply chain management. At the same time, it suggests that for Taiwan maintaining stable cooperation relations with China is also important. Meanwhile, the proportion of imports from Taiwan out of China’s imports of intermediate goods was the highest in the world. It indicates that Taiwan is of great importance for China as well.
 According to the I-O analysis, the most beneficial country from Taiwan’s electrical and optical equipment industry production was China (US$ 105 billion in value added). It means that 46.4% of the global spillover effects (excluding Taiwan) from the industry production of Taiwan belongs to China., followed by U.S.(10.3%), Japan (7.5%), and Korea (6.7%). In addition, the electrical and optical equipment industry in Taiwan’s industries was found to be the industry that has a great influence on China and IPEF participating countries. It confirms that there is a close interdependence relationship between these countries in the industry.
 The results of this study implies that although political and military conflicts between China and Taiwan have recently deepened, considering their economical interdependence, it would be not easy for bilateral conflicts to be sustained in the medium to long term.

Growth of India’s High-tech Exports: Do the Import of Intermediate Goods and Inward FDI promote India’s High-tech Exports?

Growth of India’s High-tech Exports: Do the Import of Intermediate Goods and Inward FDI promote India’s High-tech Exports?

Indian Experience of Managing Impossible Trinity, Growth and Possible Tradeoff Between FDI and FIIs: Nature of Capital Inflows Matter

The current focus emphasizes the difficult choices faced by Indian management of the impossible trinity to manage import-led growth. The management highlights two mechanisms by which FDI (foreign direct investment) flows are easily substituted for short-run FII (foreign institutional investment) flows. First, GDP and its growth in an open economy framework and the associated international trade participation can clarify this substitution prospect. Specifically, this study develops reasoning whereby imports under the trilemma management can give some decisive advantage to FII at the cost of FDI to manage Indian import-led growth. Second, it underlines how the related policies, especially the sterilization interventions, constrain the interactions of higher domestic investments (domestic savings), spillover impacts of imports of intermediate and capital goods, and specialized FDI. If so, the Indian economy’s import-led growth can indicate FII and FDI tradeoffs. The study uses the ARDL regression method. The results show that the Indian policy-led macro environment can limit the scope of specialized FDI that aims to induce advanced domestic investment, exports, and FDI interactions. India’s focus on import-led growth thereby underpins how FII substitutes FDI. JEL Classification F21, F3, F4, O11, O14

The imports of intermediate goods, relative price and real effective exchange rate relationship: The case of Turkey

The imports of intermediate goods, relative price and real effective exchange rate relationship: The case of Turkey

The Impact of Intermediate Goods Imports on Energy Efficiency: Empirical Evidence from Chinese Cities.

Improving energy efficiency is a critical way to solve energy shortage and environmental problems and achieve the goal of “double carbon”. As China expands imports and integrates into global value chains, can import trade improve energy efficiency? This topic is extremely important for solving current energy problems and promoting sustainable economic development. Based on panel data of prefecture-level cities in China, this paper uses the Super-SBM model to measure the total factor energy efficiency of cities and investigates the impact of intermediate goods imports on energy efficiency with fixed effects models and instrumental variable method (IV). The study finds that: (1) intermediate goods imports contribute to the increase of urban energy efficiency, and the mechanism test indicates that intermediate goods imports affect energy efficiency through the technology spillover effect and intermediate goods type diversification effect. (2) According to the heterogeneity analysis, the effect of intermediate goods imports on energy efficiency is more evident in eastern China and cities with low topographic relief, medium population scale, and high absorption capability. (3) Analysis of the spatial spillover effect with the SDM model shows that importing intermediate goods promotes energy efficiency in local cities and radiates energy efficiency improvement in neighboring cities.

Trade and structural change: An empirical investigation

This paper investigates the role of international trade in explaining the decrease of the tradable sector employment share (agriculture, mining and manufacturing). Borrowing insights from the vast theoretical literature on the determinants of structural change, we build an empirical model that allows distinguishing between long-run and short-run effects. This model is used to investigate the relative importance of the main traditional demand-side and supply-side mechanisms of structural change, assessing, in this context, the role of trade variables. To this end, we use an unbalanced panel of countries for the period 1960–2011 from the EU-KLEMS and GGDC 10-sector databases. Our results suggest that both Engelian income effects, i.e. so-called demand-side drivers, and relative productivity, i.e. the supply-side mechanism, are relevant drivers of structural change, the former, particularly, in the long-run and the latter in the short-run only. We show that international trade directly contributes to structural change: imports are negatively related with employment shifts to tradable sectors in particular in the long-run. By contrast, exports and shifts of employment towards tradables are positively associated. Trade affects structural change also indirectly by enhancing the two internal drivers of structural change, i.e. the supply-side and the demand-side one. When trade is split in intermediate and final goods, we show that in the long-run the negative elasticity of structural change to import is driven by imports of intermediate goods, while the positive sign of exports is driven by exports of final goods.