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Imported intermediates, innovation, and product scope: Firm-level evidence from developing countries

Author

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  • Shepherd, Ben
  • Stone, Susan

Abstract

This paper generalizes recent work for India which shows that the use of imported intermediates is associated with the creation of new product varieties by domestic firms. It uses firm-level data for 17 developing countries and 13 sectors to show that firms that source their inputs internationally tend to introduce more new products than those that use domestic inputs only. In the preferred specification, a firm that imports all of its intermediates tends to produce 18% more new products than a firm that sources all of its inputs locally, after controlling for other factors.

Suggested Citation

  • Shepherd, Ben & Stone, Susan, 2012. "Imported intermediates, innovation, and product scope: Firm-level evidence from developing countries," MPRA Paper 41704, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:41704
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    File URL: https://mpra.ub.uni-muenchen.de/41704/1/MPRA_paper_41704.pdf
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    References listed on IDEAS

    as
    1. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    2. 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, President and Fellows of Harvard College, vol. 125(4), pages 1727-1767.
    3. Daniel Lederman, 2010. "An international multilevel analysis of product innovation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(4), pages 606-619, May.
    4. Murat Seker & Daniel Rodriguez Delgado & Mehmet Fatih Ulu, 2015. "Imported Intermediate Goods and Product Innovation : Evidence from India," Working Papers 1537, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
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    Cited by:

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    2. Almodóvar, Paloma & Nguyen, Quyen T.K. & Verbeke, Alain, 2021. "An integrative approach to international inbound sources of firm-level innovation," Journal of World Business, Elsevier, vol. 56(3).
    3. Jiayun Xu & Qilin Mao, 2018. "On the relationship between intermediate input imports and export quality in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(3), pages 429-467, July.

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    More about this item

    Keywords

    Intermediate Inputs; Product Scope; Trade Policy; Developing Countries;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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