Exploring the import-export nexus at firm level using a generalized propensity score approach

We use a dose-response function to investigate how the level of imports of intermediate inputs affects the level of exports using the universe of Spanish two- way trading manufacturers in the year 2004. First, we find a positive but non- linear import-export nexus. Second, low levels of imports don’t significantly boost exports—but as import levels reach the median range, the positive impact becomes much more pronounced. Third, the impact varies by the level of income of the country-of-origin of imports; the larger effect on total exports is linked to imports coming mainly but not exclusively from high-income countries. Finally, higher imports from high-income countries lead firms to export more to these countries relative to low-income countries while the opposite is not observed.