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Irish firms' productivity and imported inputs

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  • FORLANI, Emanuele

    ()
    (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

Abstract

In this paper, we empirically analyze the evolution of firms’ productivity and how the efficiency changes with variations in the inputs’ origin. Using firm-level information on a sample of Irish firms, we assess the importance of the imported inputs’ quota for a firm’s efficiency, as well as starting import activity. The main findings are that an increase in the intensive margin of imports raises firms’ efficiency of domestic firms; in addition heterogeneous effects across firms are detected. Unlike the findings of most of the literature, there is weak evidence of self-selection in import activity; differently from previous research when we introduce fixed effects, the self-selection disappears. Instead, the few observed firms that start importing raise their productivity compared to non-importing firms; learning by importing is suspected. The results suggest an important policy implication: policies that favor the imports of intermediates enhance the productivity of domestic firms, making them more competitive in the international markets.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2010015.

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Date of creation: 01 Apr 2010
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Handle: RePEc:cor:louvco:2010015

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Keywords: firms' productivity; inputs; import; Ireland;

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  1. Francesco Caselli & Daniel Wilson, 2003. "Importing technology," Working Paper Series 2003-04, Federal Reserve Bank of San Francisco.
  2. Holger G–rg & Eric Strobl, 2003. "Multinational Companies, Technology Spillovers and Plant Survival," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(4), pages 581-595, December.
  3. Vogel, Alexander & Wagner, Joachim, 2008. "Higher Productivity in Importing German Manufacturing Firms: Self-Selection, Learning from Importing, or Both?," IZA Discussion Papers 3854, Institute for the Study of Labor (IZA).
  4. Görg, Holger & Hanley, Aoife & Strobl, Eric, 2007. "Productivity Effects of International Outsourcing: Evidence from Plant Level Data," CEPR Discussion Papers 6361, C.E.P.R. Discussion Papers.
  5. Nick Bloom & Raffaella Sadun & John Van Reenen, 2007. "Americans do I.T. better: US multinationals and the productivity miracle," LSE Research Online Documents on Economics 4555, London School of Economics and Political Science, LSE Library.
  6. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  7. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2005. "Importers, Exporters, and Multinationals: A Portrait of Firms in the U.S. that Trade Goods," NBER Working Papers 11404, National Bureau of Economic Research, Inc.
  8. László Halpern & Miklós Koren & Adam Szeidl, 2011. "Imported Inputs and Productivity," CeFiG Working Papers 8, Center for Firms in the Global Economy, revised 16 Sep 2011.
  9. Carlo Altomonte & Gabor Bekes, 2009. "Trade Complexity and Productivity," IEHAS Discussion Papers 0914, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  10. Joze P. Damijan & Jose de Sousa & Olivier Lamotte, 2008. "Does international openness affect productivity of local firms? Evidence from Southeastern Europe," LICOS Discussion Papers 21908, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  11. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  12. Pinelopi Koujianou Goldberg & Amit Kumar Khandelwal & Nina Pavcnik & Petia Topalova, 2010. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," The Quarterly Journal of Economics, MIT Press, vol. 125(4), pages 1727-1767, November.
  13. Andrew B. Bernard & Ilke Van Beveren & Hylke Vandenbussche, 2010. "Multi-product exporters, carry-along trade and the margins of trade," Working Paper Research 203, National Bank of Belgium.
  14. James Levinsohn & Amil Petrin, 2000. "Estimating Production Functions Using Inputs to Control for Unobservables," NBER Working Papers 7819, National Bureau of Economic Research, Inc.
  15. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  16. Davide Castellani & Francesco Serti & Chiara Tomasi, 2008. "Firms in International Trade: Importers and Exporters Heterogeneity in the Italian Manufacturing Industry," LEM Papers Series 2008/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  17. Ralf Martin, 2010. "Productivity Spreads, Market Power Spreads and Trade," CEP Discussion Papers dp0997, Centre for Economic Performance, LSE.
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Cited by:
  1. Wagner, Joachim, 2011. "International Trade and Firm Performance: A Survey of Empirical Studies since 2006," IZA Discussion Papers 5916, Institute for the Study of Labor (IZA).
  2. Alessia LO TURCO & Daniela MAGGIONI, 2011. "On the Role of Imports in Enhancing Manufacturing Exports," Working Papers 363, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  3. Neil Foster-McGregor & Anders Isaksson & Florian Kaulich, 2013. "Importing, Productivity and Absorptive Capacity in Sub-Saharan African Manufacturing Firms," wiiw Working Papers 105, The Vienna Institute for International Economic Studies, wiiw.
  4. David Aristei & Davide Castellani & Chiara Franco, 2011. "Firms' exporting and importing activities: is there a two-way relationship?," Quaderni del Dipartimento di Economia, Finanza e Statistica 99/2011, Università di Perugia, Dipartimento Economia, Finanza e Statistica.
  5. Giuliano CONTI & Alessia LO TURCO & Daniela MAGGIONI, 2012. "Rethinking the import-productivity nexus for Italian manufacturing," Working Papers 381, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  6. Basak Dalgic & Burcu Fazlioglu & Deniz Karaoglan, 2014. "Entry to Foreign Markets and Productivity: Evidence from a Matched Sample of Turkish Manufacturing Firms," ERC Working Papers 1403, ERC - Economic Research Center, Middle East Technical University, revised May 2014.

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