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Imports and TFP at the Firm Level: The Role of Absorptive Capacity

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  • Augier, Patricia
  • Cadot, Olivier
  • Dovis, Marion

Abstract

This paper estimates the effect of the decision to import intermediate goods and capital equipment on Total Factor Productivity (TFP) at the firm level on a panel of Spanish firms covering the period between 1991 and 2002. We use two alternative approaches. In the first, we estimate TFP using the Olley-Pakes semi-parametric method and apply a diff-in-diff estimator with a control group constructed by propensity-score matching. In the second, direct method, we estimate TFP with imported inputs as a state variable in one stage. Both approaches show that the effect of a firm’s decision to source intermediates and capital equipment abroad on its TFP depends critically on its capacity to absorb technology, measured by the proportion of skilled labor. This provides indirect evidence that imported capital equipment may embody new or different technologies that require adaptation at which some firms are better than others. If skilled labor proxies for adaptability, it is how firms adapt their production processes to the foreign inputs that seems to determine whether or not they benefit from them.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7218.

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Date of creation: Mar 2009
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Handle: RePEc:cpr:ceprdp:7218

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Keywords: absorptive capacity; imports; Olley-Pakes; TFP;

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Citations

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Cited by:
  1. Ricardo Argüello, 2013. "Trade diversification in Colombia, 1991-2011," BORRADORES DE INVESTIGACIÓN 011019, UNIVERSIDAD DEL ROSARIO.
  2. 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.
  3. Olivier CADOT & Céline CARRERE & Vanessa STRAUSS-KAHN, 2011. "Trade Diversification, Income, and Growth: What Do We Know?," Working Papers P33, FERDI.
  4. Joachim Wagner, 2011. "International Trade and Firm Performance: A Survey of Empirical Studies since 2006," Working Paper Series in Economics 210, University of Lüneburg, Institute of Economics.
  5. Carlos Carreira, 2013. "Learning, Exporting and Firm Productivity: Evidence from Portuguese Manufacturing and Services Firms," GEMF Working Papers 2013-23, GEMF - Faculdade de Economia, Universidade de Coimbra.
  6. María D. Parra & Inmaculada Martínez-Zarzoso, 2014. "Imported intermediate inputs and Egyptian exports: Exploring the links," Working Papers 2014/09, Economics Department, Universitat Jaume I, Castellón (Spain).
  7. Maria Bas & Vanessa Strauss-Kahn, 2014. "Does importing more inputs raise exports? Firm-level evidence from France," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 150(2), pages 241-275, May.
  8. 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.

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