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Indirect import, intermediate trade liberalization and corporate innovation

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  • Jiang, Guanhong
  • Yan, Zixiao

Abstract

This paper examines how indirect import affects innovation in non-importing firms amid intermediate goods trade liberalization. Using data from the China Industrial Enterprise Database, customs records, and patent data (2000–2013), the study finds: (1) Trade liberalization boosts innovation in non-importing firms, though less than in direct importers; (2) Innovation gains stem from indirect import, especially in industries with more trade intermediaries; (3) Firms with greater absorptive capacity benefit more; (4) Invention patent growth is most notable via indirect import; (5) Intermediaries broaden input choices and help firms shift to direct imports. The study deepens understanding of how indirect import drives innovation.

Suggested Citation

  • Jiang, Guanhong & Yan, Zixiao, 2026. "Indirect import, intermediate trade liberalization and corporate innovation," Finance Research Letters, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:finlet:v:93:y:2026:i:c:s1544612326001182
    DOI: 10.1016/j.frl.2026.109587
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    References listed on IDEAS

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