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New Imported Inputs, New Domestic Products

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  • Italo Colantone

    ()
    (Erasmus University Rotterdam and ERIM)

  • Rosario Crinò

    ()
    (University of Brescia, Centro Studi Luca d’Agliano and IAE-CSIC)

Abstract

We study the effects of new imported inputs on the entry of new domestic products and their characteristics. To this purpose, we construct a novel, comprehensive and extremely detailed dataset, which contains product-level information on foreign trade and domestic production for 25 EU countries over 1995-2007. Using these data, we identify new domestic goods and new imported inputs, controlling for all changes in commodity classifications over time. We then show that new imported inputs substantially boost the introduction of new domestic products. We also show that this effect is directly proportional to the quality of new imported inputs and inversely related to their price (conditional on quality). Finally, we document that new products are characterized by higher prices and higher quality relative to existing goods, and that such premia are larger the greater is the use of new imported inputs in production.

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Bibliographic Info

Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 312.

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Length: 57
Date of creation: 06 Sep 2011
Date of revision:
Handle: RePEc:csl:devewp:312

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Keywords: New Intermediate Inputs; Product Innovation; Input and Output Prices; Input;

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Cited by:
  1. Italo Colantone & Rosario Crinò, 2011. "New Imported Inputs, New Domestic Products," Development Working Papers 312, Centro Studi Luca d\'Agliano, University of Milano.
  2. Rosario Crinò & Laura Ogliari, 2014. "Finanical Frictions, Product Quality, And International Trade," Working Papers wp2014_1403, CEMFI.
  3. Olper, Alessandro & Pacca, Lucia & Curzi, Daniele, 2013. "Trade, Import Competition and Productivity Growth In the Food Industry," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152383, International Agricultural Trade Research Consortium.
  4. Crinò, Rosario, 2012. "Imported inputs and skill upgrading," Labour Economics, Elsevier, vol. 19(6), pages 957-969.
  5. David Aristei & Davide Castellani & Chiara Franco, 2013. "Firms’ exporting and importing activities: is there a two-way relationship?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 149(1), pages 55-84, March.

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