Imports of Intermediate Inputs and Product Innovation in Asian Countries

This study examines the role of imports of intermediate inputs in product innovation in the context of ASEAN countries. While there have been many studies examining the role of exporting activities on innovation, the role played by importing activities is less explored. In fact, intermediate input imports can create “learning effects” or “learning-by-importing” effects, which helps spur innovation. Therefore, investigating the role of importing activities is of particular interest. This study contributes to a better understanding of this role of imports of intermediate inputs, which has not been extensively studied in the innovation literature. The study uses data from the “Enterprise Survey” (ES) by the World Bank, which is a large survey covering more than 135,000 firms in 135 countries. This study uses the most recent data of five large ASEAN countries (i.e., Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) in 2015–2016, which forms a cross-sectional sample of 3,928 firms. Several ordinal regression models are utilized in the empirical estimation. The finding shows that imports of intermediate inputs have a significant and positive influence on the possibility of radical product innovation. The result suggests that firms should consider importing high-quality inputs to learn from new, advanced, and relevant technologies embedded in these inputs for the development of new products.