Imports Of Intermediate Inputs Research Articles

The effects of state-level foreign manufacturing imports on domestic inter-state and intra-state sales in the U.S.A

United States is the largest importer of goods in the world. Imports of capital goods, industrial machinery, and automotive parts account around 90 percent of total imports. Imports of intermediate inputs are often the catalyst for increased domestic economic growth. Using the well-known structural gravity model and Commodity Flow Survey (CFS) data on domestic trade in the United States for the years 1993, 1997, 2002, 2007, 2012 and 2017, we analyze the impact of foreign imports of manufacturing goods by the states on their domestic sales: both intra-state and inter-state sales. We find fairly strong support for our hypothesis that foreign imports by a state promote both sales to itself and to other states; but the effect is stronger for inter-state sales than to intra-state sales. We carry out a series of robustness checks, and the qualitative results remain the same. The results of this paper has important policy implications and suggest that elimination of the transaction costs in international trade are likely to have positive effect on the U.S. economy.

The enhancing effect of imports of intermediate inputs on firms' exports

AbstractWe investigate the impact of imports of intermediate inputs on export value and portfolio among Spanish regular two‐way trade of manufacturing firms over the period 1997–2018. After controlling for firm characteristics and addressing endogeneity, we find that firms that import intermediate inputs from non‐EUEFTA countries enhance the volume and scope of their EU15 exports. The magnitude of the impact is similar for high‐income countries and low‐income countries and there are no changes in sourcing patterns before or after the financial crisis.

Ripple effects in regional value chains: Evidence from an episode of the US–China trade war

AbstractThis study empirically examines the ripple effect of demand shocks on upstream suppliers in regional value chains. Specifically, we investigate how changes in US imports from China alter China's imports of intermediate inputs in machinery industries from Japan, South Korea and Taiwan. The analysis of China's monthly imports from the three supplier economies during 2018–2019 finds that the decrease in China's output exports to the US caused by the Trump tariffs reduced China's input imports from supplier economies. Also, this adverse ripple effect was the most significant in Taiwan, where multinational enterprises use China as an export platform.

Do imports of intermediate inputs generate higher productivity? Evidence from Ecuadorian manufacturing firms

AbstractThis paper examines the causal effect of importing on firm productivity. We use an augmented Cobb–Douglas production function in which the static and dynamic effects of importing and exporting are estimated for formal manufacturing firms in Ecuador. We use a rich administrative data set that covers the period 2007–2018 and estimate total factor productivity (TFP) at the firm level. Our results show that both static and dynamic effects are important sources of gains from importing. We find that static and dynamic gains in productivity from importing intermediates are higher in more innovative industries than in less innovative industries, which implies an industrial heterogeneity effect. We also find that the elasticity of substitution between imported and domestic intermediates in all the industries are substitute inputs. Finally, we provide robust evidence in favour of self‐selection on the entry and exit side sides of the market. Our estimation results provide support to the learning‐by‐importing hypothesis.

The impact of globalization on domestic employment

ABSTRACT Immigrants and offshore workers become important disturbing factors of domestic employment in the globalized economy. In this study we build a model with this feature to test how the three groups of workers in the labour force interact using a panel data of 155 countries over the period 1990–2015. We find that while immigrants replaced native workers (especially highly skilled ones), offshore workers who produce intermediate input imports do not. The productivity effect of offshoring is stronger for developed economies while the substitution effect of immigration is stronger for developing countries. Furthermore, the productivity effects of immigration and offshoring are stronger when governments impose less restrictions on international trade and domestic labour market.

The Motor Vehicles Industry in Slovakia, 2005 – 2015

This note examines the evolution of the Slovak motor vehicles sector during 2005-2015, drawing on the latest update (December 2018) of OECD's Inter-Country Input-Output (ICIO) model database. The review takes a global value chain (GVC) approach and looks at the linkages from the gross production and value added perspectives. The overall contribution of the motor vehicles sector to Slovakia's gross production and domestic value added increased twofold during the reference period. There was an ongoing change in the structure of the GVC linkages. The reliance on domestically-sourced inputs increased over the years. The (indirect) value added created in the production of domestically-sourced inputs gradually approached the level of the (direct) value added generated within the motor vehicles sector. Subsequent to the global financial crisis, the share of intermediate goods in exports, the forward linkage of the GVC, and the upstreamness of the production process were all on a rising trend. The sourcing pattern of imports of intermediate inputs and the market for exports steadily shifted away from the euro area towards non-EU countries. It is estimated that a hypothetical 10 percent negative shock to global final demand for motor vehicles would lower Slovak GDP growth by 1 percentage point.

The role of imported inputs in firms’ productivity and exports: evidence from Indonesia

The rise of economic protectionism worldwide has come with the re-emergence of mercantilist policies whereby governments push for exports while restricting imports. Against this populist approach, we show that importing inputs can raise productivity and export. Using firm-level data matched with very detailed customs data of Indonesia’s exports and imports during 2008–2012, we apply instrumental variable strategy with import tariffs and import weighted real exchange rates as instruments for import of intermediate inputs. We find causality from imported inputs to productivity increase and export growth. Higher access to input varieties has a larger impact than an increase in import volume on export, implying that the main benefits of importing may come from access to broader alternatives of inputs. Furthermore, the impact is also larger when imports originate from developed countries, suggestive of a positive effect of technology and product quality.

Exchange rate volatility and import of intermediate inputs: Evidence from Chinese firms

An extensive amount of literature suggests that exchange rate volatility has a negative impact on international trade. However, very few research consider the distinct effect of exchange rate volatility on intermediate input trade. This paper studies the effects of exchange rate volatility on the import of intermediate inputs and evaluates how the effects are shaped by a series of firm characteristics. Using a comprehensive dataset of Chinese importing firms from 2000 to 2006, our empirical analysis indicates that exchange rate volatility negatively impacts the import of intermediate inputs both on the extensive and intensive margin. Further, we find that this negative effect is more pronounced for firms with higher financial vulnerability. We use a simple schematic diagram to explain the transmission mechanism and emphasize the role of financial vulnerability in amplifying the effects of exchange rate volatility.

R&D SPILLOVER, FIRM SIZE AND IN-HOUSE R&D: PANEL DATA EVIDENCE FROM ELECTRONICS GOODS SECTOR IN INDIA

This study examines the impact of R&D spillover and firm size on the R&D intensity of electronic firms operating in India for the time period 2000–2015. The study finds that firms benefitting from R&D spillover in their line of business are spending more on in-house R&D, indicating complementarity between R&D spillover and R&D efforts. When we consider possible R&D spillover with firm size, the positive association between R&D spillover and in-house R&D activity holds after a certain threshold of firm size is reached. A probable implication for the moderating influence of firm size suggests that large-sized firms have financial resources and the capability to assimilate technological knowledge in their product designs and processes. An inverted-U relationship between firm size and R&D suggests that support and assistance with the cost of research and development can spur the innovation incentive of small- and medium-sized firms. The empirical finding indicates that fringe firms in the electronics sector aim at developing new technology. The import of intermediate inputs appears to be negatively associated with in-house R&D. This suggests substitutability between imported intermediaries and R&D activity. In the case of R&D reporting firms, the coefficient of embodied technology and capital intensity turns out to be positive and significant. As it remains, an increase in the import of capital goods promotes in-house R&D of electronic firms. At the same time undertaking R&D activity in a high-tech sector is capital intensive. Hence, firms require capital reserves to engage in innovative activities and remain competitive.

Trade balances and global value chains: Is there a link?

This paper assesses whether and how the participation to Global Value Chains (GVCs) contributes to trade imbalances. We test empirically the relationship between GVCs participation and a country’s net export for 42 countries in the period 2000–2014, using the World Input - Output Database (WIOD) on international production linkages. We find that trade balance is positively associated with countries’ involvement in GVCs, but the trade balance worsens the higher the offshoring to lower-income countries, while it improves the higher the offshoring to higher-income countries. This asymmetry suggests that when countries offshore to higher-income partners the gains in competitiveness overcome the potentially negative effect of larger imports of intermediate inputs.

The Chinese are Here: Import Penetration and Firm Productivity in Sub-Saharan Africa

This study presents the first micro-level analysis of the causal effect of Chinese import penetration on firm productivity in 24 sub-Saharan Africa (SSA) countries. We make key contributions to the literature by examining the heterogeneous effects of Chinese imports on firm productivity using data on transport infrastructure, and by distinguishing between import competition and import of intermediate inputs. Two instrumental variables, one based on exogenous geographic characteristic of ports and transportation technology shock, and the other based on a supply-side shock, are constructed to address the endogeneity of import penetration. The results indicate that imports from China impact positively on firm productivity, mainly through imports of intermediate inputs, and there is significant heterogeneity of these effects in terms of firms’ proximity to ports and initial productivity level. Overall, our findings suggest that Chinese imports could be viewed as an opportunity for Sub-Sahara Africa firms to enhance their productivity. Furthermore, they highlight the need for developing countries to invest in transport infrastructure to effectively promote firms participation in international markets.

Trade liberalization induced profitability enhancement? The impact of intermediate input imports on firm profitability

Using the detailed data on production and transaction of Chinese manufacturing firms, we investigate how the input tariff liberalization affects firm profitability and explore the underlying channels of this effect. We find that input tariff reduction significantly increases firms’ profitability. Our finding is robust to a variety of specifications. We further find that the quality upgrading of imported intermediate inputs and the reduction of inventory costs are the main reasons for the profit-enhancing effect of input tariff reduction. Our study has important policy implications for the economic growth in the long run and the economic recovery during the epidemic of COVID-19.

Imports and credit rationing: A firm‐level investigation

AbstractFirm performance is known to benefit from participation in import markets. For this reason, understanding whether credit constraints hamper firms’ ability to purchase foreign inputs is a relevant issue. In this paper, we investigate the relationship between financial constraints and imports of intermediate inputs using a large sample of small‐ and medium‐sized enterprises from 66 developing countries. To measure credit constraints, we use information from a firm's in‐depth self‐assessment of its difficulties in having access to external finance. Furthermore, to tackle the endogeneity problems in the estimation, we rely on an instrumental variable approach that allows us to establish more directly the impact of financial constraints on importing activities. We provide statistically and economically significant evidence that credit‐constrained firms have a lower probability of importing intermediates (the extensive margin) and a smaller share of imported intermediates in their total input expenditure (the intensive margin). Moreover, we show that the impact on these margins of import is stronger for firms operating in countries where the financial system is less developed, the quality of institutions poorer and the overall level of economic freedom lower.

Internationalization and product innovation in ASEAN: The moderating role of organizational innovation

This study investigates whether an internationalization strategy affects product innovation in ASEAN. In addition, we examine whether organizational innovation moderates the internationalization's effects on product innovation in Association of South East Asian Nation (ASEAN). The empirical analysis is performed using data from the World Bank's Enterprise Surveys and different novel ordinal regression models as well as the propensity score matching (PSM) technique to partially address the endogeneity concern. The results indicate a positive direct effect on product innovation by two modes of internationalization that we analyze (intermediate input imports and exports) and as well by organizational innovation. Furthermore, organizational innovation moderates the internationalization–innovation relationship positively.

Comments on Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity

October 01 2020 Comments on Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity Author and Article Information Online Issn: 1536-0083 Print Issn: 1535-3516 © 2020 by the Asian Economic Panel and the Massachusetts Institute of Technology2020Asian Economic Panel and the Massachusetts Institute of Technology Asian Economic Papers (2020) 19 (3): 107–108. https://doi.org/10.1162/asep_a_00790 Cite Icon Cite Permissions Share Icon Share Twitter LinkedIn Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Search Site Citation Comments on Revisiting Complementarity between Japanese FDI and the Import of Intermediate Goods: Agglomeration Effects and Parent-firm Heterogeneity. Asian Economic Papers 2020; 19 (3): 107–108. doi: https://doi.org/10.1162/asep_a_00790 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu nav search search input Search input auto suggest search filter All ContentAll JournalsAsian Economic Papers Search Advanced Search Deborah Swenson, University of California, Davis: By tracking the detailed product-level trade transactions for 929 Japanese affiliates in China, Ito, Matsuura, and Yang contribute to the classic literature that investigates the complementarity versus substitutability of trade and FDI. To advance this question, the paper studies the duration of intermediate input imports by these Chinese affiliates between 2000 and 2006. Because the authors have taken on the arduous task of creating a data set that combines four different sources, they illuminate a number of interesting relationships that are generally obscured by firm efforts to hide their proprietary actions from view. The key question posed by this paper is: How is the duration of intermediate input import by Chinese affiliates shaped by product, firm-level, and national considerations? Thanks to the paper's careful data effort, much of the paper's novelty lies in its ability to relate this question to the Japanese parent firms’... You do not currently have access to this content.

Intermediate Input Imports, Domestic Input Use and Firm-level Outcomes: Evidence from Survey Data

Imported intermediate inputs, that is, parts and materials sourced from abroad and used to make products either consumed domestically or in producing exported goods are a growing force in world trade. We test for the relative effect of imported intermediate inputs and domestic inputs in promoting foreign exports and various forms of domestic sales, using firm-level survey data. Imported intermediate inputs are found to be associated with higher overall sales, foreign exports and larger sales to multinational companies domiciled in the home country. On the other hand, domestic inputs are not found to have statistically significant positive effect on any firm-level outcomes. Since exporting firms are usually more productive than domestic firms, the results point towards the salience of outsourcing inputs in supporting firm productivity and the importance of policymaking in facilitating trade in intermediate inputs across countries. JEL: F10, F12, F23

Imports and Credit Rationing: A Firm-Level Investigation

Firm performance is known to benefit from participation in import markets. For this reason, understanding whether credit constraints hamper firms’ ability to purchase foreign inputs is a relevant issue. In this paper, we investigate the relationship between financial constraints and imports of intermediate inputs using a large sample of small- and medium-sized enterprises from 66 developing countries. To measure credit constraints we use information from a firm’s in-depth self-assessment of its difficulties in having access to external finance. Furthermore, to tackle the endogeneity problems in the estimation, we rely on an instrumental variable approach that allows us to establish more directly the impact of financial constraints on importing activities. We provide robust evidence of a statistically and economically significant restraining effect of credit constraints on both the probability of importing intermediates (the extensive margin) and the incidence of imported intermediates in total input expenditure (the intensive margin). Moreover, we show that the impact on these margins of import is stronger for firms operating in countries where the financial system is less developed, the quality of institutions poorer and the overall level of economic freedom lower.

International linkages, technology transfer, and the skilled labor wage share: Evidence from plant-level data in Indonesia

Abstract This paper examines whether technology transfer through international linkages (such as the importing of intermediate inputs and foreign direct investments) influences skilled labor wage shares in Indonesian plants. Using a variety of specifications, estimators, and robustness checks (including Correlated Random Effects Probit, quantile fixed effects regression, and a moment-based instrumental variable (IV) approach), we find that the import of intermediate inputs and foreign direct investment likely facilitate the transfer of technologies from advanced nations, which then results in skill-biased technological change and increased relative skilled labor wage share. These results indicate that, contrary to standard trade theory predictions, international linkages can lead to increased demand for skilled labor and a potential widening of the skilled-unskilled labor wage gap in Indonesia. Our findings support the theoretical explanation provided by Acemoglu (2003). Since firms in developing countries like Indonesia mainly rely on technologies from advanced nations, trade is likely to increase (rather than decrease) the skilled wage premium.

Imports and Credit Rationing: A Firm-Level Investigation

Firm performance is known to benefit from participation in import markets. For this reason, understanding whether credit constraints hamper firms’ ability to purchase foreign inputs is a relevant issue. In this paper, we investigate the relationship between financial constraints and imports of intermediate inputs using a large sample of small- and medium-sized enterprises from 66 developing countries. To measure credit constraints we use information from a firm’s in-depth self-assessment of its difficulties in having access to external finance. Furthermore, to tackle the endogeneity problems in the estimation, we rely on an instrumental variable approach that allows us to establish more directly the impact of financial constraints on importing activities. We provide robust evidence of a statistically and economically significant restraining effect of credit constraints on both the probability of importing intermediates (the extensive margin) and the incidence of imported intermediates in total input expenditure (the intensive margin). Moreover, we show that the impact on these margins of import is stronger for firms operating in countries where the financial system is less developed, the quality of institutions poorer and the overall level of economic freedom lower.

Intermediate imports and innovation performance: do family firms benefit more?

PurposeThe purpose of this paper is to analyze the impact of imported intermediate inputs on innovation performance, differentiating among types of innovation output (product and process innovation) and considering both family and non-family firms in the Spanish context.Design/methodology/approachThis paper uses an unbalanced panel of 1963 firms in the Spanish manufacturing sector (13,155 observations; 2006–2016) that can be identified as family or non-family firms. The authors apply a recently developed methodology (conditional mixed process model) that takes into account the possible relationships among the dependent variables to a panel bivariate probit model with robust standard errors.FindingsImporting intermediate inputs is an important source of process innovation for all firms, but not of product innovations. Significant differences were found between family and non-family firms in favor of the family type.Research limitations/implicationsThis paper breaks down the family state into two categories (belonging to a family group or not) because the database does not contain information regarding the percentage of family ownership or the number of family members in the management structure. Moreover, the research is context specific.Practical implicationsThese results will be useful for firms that are considering the value of importing intermediate inputs as a strategy to improve their process innovations, particularly for family firms.Social implicationsFamily firms are more successful in the utilization of imported intermediate inputs to achieve greater innovation performance. If family firms are more competent in leveraging their intermediate input imports in innovation performance, it should contribute to increasing business performance.Originality/valueThe research on imports takes into account the different impacts of intermediate imports depending on innovation performance (product innovation vs process innovation) and the nature of the firm (family firms vs non-family firms).