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Imports and TFP at the Firm Level: The Role of Absorptive Capacity

  • Patricia AUGIER

    (FERDI)

  • Olivier CADOT

    (Faculté des hautes études commerciales - Université de Lausanne)

  • Marion DOVIS

    (FERDI)

This paper estimates the effect of the decision to import intermediate goods and capital equipment on Total Factor Productivity (TFP) at the firm level on a panel of Spanish firms (1991-2002). We use two alternative approaches. In the first, we estimate TFP and apply a diff-in-diff estimator with a control group constructed by propensity-score matching. In the second, direct method, we estimate TFP with imported inputs as a state variable in one stage. Both approaches show that the effect of a firm’s decision to source intermediates and capital equipment abroad on its TFP depends critically on its capacit y to absorb technology, measured by the proportion of skilled labor.

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Paper provided by FERDI in its series Working Papers with number P44.

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Date of creation: Apr 2012
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Handle: RePEc:fdi:wpaper:519
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