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Irish firms' productivity and imported inputs

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  • FORLANI, Emanuele

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

Abstract

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.

Suggested Citation

  • FORLANI, Emanuele, 2010. "Irish firms' productivity and imported inputs," CORE Discussion Papers 2010015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2010015
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    Cited by:

    1. Giuliano Conti & Alessia Lo Turco & Daniela Maggioni, 2014. "Rethinking the import-productivity nexus for Italian manufacturing," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 589-617, November.
    2. Ricardo A. López & Huong D. Nguyen, 2015. "Real Exchange Rate Volatility and Imports of Intermediate Inputs: A Microeconometric Analysis of Manufacturing Plants," Review of International Economics, Wiley Blackwell, vol. 23(5), pages 972-995, November.
    3. Neil Foster-McGregor & Anders Isaksson & Florian Kaulich, 2016. "Importing, Productivity and Absorptive Capacity in Sub-Saharan African Manufacturing and Services Firms," Open Economies Review, Springer, vol. 27(1), pages 87-117, February.
    4. Başak Dalgıç & Burcu Fazlıoğlu & Deniz Karaoğlan, 2015. "Entry to foreign markets and productivity: Evidence from a matched sample of Turkish manufacturing firms," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(5), pages 638-659, August.
    5. Joachim Wagner, 2012. "International trade and firm performance: a survey of empirical studies since 2006," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(2), pages 235-267, June.
    6. Alessia Lo Turco & Daniela Maggioni, 2013. "On the Role of Imports in Enhancing Manufacturing Exports," The World Economy, Wiley Blackwell, vol. 36(1), pages 93-120, January.
    7. Neil Foster-McGregor & Anders Isaksson & Florian Kaulich, 2013. "Importing, Productivity and Absorptive Capacity in Sub-Saharan African Manufacturing Firms," wiiw Working Papers 105, The Vienna Institute for International Economic Studies, wiiw.
    8. Dalgic, Basak & Fazlioglu, Burcu & Gasiorek, Michael, 2015. "Costs of trade and self-selection into exporting and importing: The case of Turkish manufacturing firms," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 9, pages 1-28.
    9. 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;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(1), pages 55-84, March.
    10. Ricardo Lopez & Kathleen McQueeney, 2017. "Does Foreign Trade Facilitation Improve Firms’ Export Performance? A Microeconomic Analysis of Chilean Manufacturing Plants," Working Papers 112, Brandeis University, Department of Economics and International Businesss School.
    11. Ricardo Lopez, 2015. "Long Real Exchange Rate Volatility and Imports of Intermediate Inputs: A Microeconometric Analysis of Manufacturing Plants," Working Papers 86, Brandeis University, Department of Economics and International Businesss School.
    12. Emanuele Forlani, 2012. "Competition in Services and Efficiency of Manufacturing Firms:Does “Liberalization” Matter?," LICOS Discussion Papers 31112, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

    More about this item

    Keywords

    firms' productivity; inputs; import; Ireland;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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