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Irish firms' productivity and imported inputs

  • FORLANI, Emanuele


    (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium)

In this paper, we empirically analyze the evolution of firms’ productivity and how the efficiency changes with variations in the inputs’ origin. Using firm-level information on a sample of Irish firms, we assess the importance of the imported inputs’ quota for a firm’s efficiency, as well as starting import activity. The main findings are that an increase in the intensive margin of imports raises firms’ efficiency of domestic firms; in addition heterogeneous effects across firms are detected. Unlike the findings of most of the literature, there is weak evidence of self-selection in import activity; differently from previous research when we introduce fixed effects, the self-selection disappears. Instead, the few observed firms that start importing raise their productivity compared to non-importing firms; learning by importing is suspected. The results suggest an important policy implication: policies that favor the imports of intermediates enhance the productivity of domestic firms, making them more competitive in the international markets.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2010015.

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Date of creation: 01 Apr 2010
Date of revision:
Handle: RePEc:cor:louvco:2010015
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