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Estimating the Productivity Selection and Technology Spillover Effects of Imports

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  • Acharya, Ram C.
  • Keller, Wolfgang

Abstract

In the wake of falling trade costs, two central consequences in the importing economy are, first, that stronger competition through increased imports can lead to market share reallocations among domestic firms with different productivity levels (selection). Second, the increase in imports might improve domestic technologies through learning externalities (spillovers). Each of these channels may have a major impact on aggregate productivity. This paper presents comparative evidence from a sample of OECD countries. We find that the average long run effect of an increase in imports on domestic productivity is close to zero. If the scope for technological learning is limited, the selection effect dominates and imports lead to lower productivity. If, however, imports are relatively technology-intensive, imports also generate learning that can on net raise domestic productivity. Moreover, there is somewhat less selection when the typical domestic firm is large. The results support models in which trade triggers both substantial selection and technological learning.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6860.

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Date of creation: Jun 2008
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Handle: RePEc:cpr:ceprdp:6860

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Keywords: market shares; R&D; Technology investments;

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Cited by:
  1. Richard Harris, 2009. "Spillover and Backward Linkage Effects of FDI: Empirical Evidence for the UK," SERC Discussion Papers 0016, Spatial Economics Research Centre, LSE.
  2. Bloom, Nicholas & Draca, Mirko & Van Reenen, John, 2011. "Trade induced technical change? The impact of Chinese imports on innovation, IT and productivity," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8236, C.E.P.R. Discussion Papers.
  3. Bezemer, Dirk & Grydaki, Maria, 2013. "Debt and the U.S. Great Moderation," MPRA Paper 47399, University Library of Munich, Germany.
  4. Anna Bohnstedt, 2013. "Spillovers from Foreign Exporters," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0400, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. Itzhak Goldberg & John Gabriel Goddard & Smita Kuriakose & Jean-Louis Racine, 2011. "Igniting Innovation : Rethinking the Role of Government in Emerging Europe and Central Asia," World Bank Publications, The World Bank, number 2358, October.
  6. Guido Friebel & Helena Schweiger, 2012. "Management quality, firm performance and market pressure in Russia," Working Papers 144, European Bank for Reconstruction and Development, Office of the Chief Economist.
  7. Edward N. Wolff, 2011. "Spillovers, Linkages, and Productivity Growth in the US Economy, 1958 to 2007," NBER Working Papers 16864, National Bureau of Economic Research, Inc.
  8. Helena Schweiger & Guido Friebel, 2013. "Management Quality, Ownership, Firm Performance and Market Pressure in Russia," Open Economies Review, Springer, Springer, vol. 24(4), pages 763-788, September.

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