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Imports, supply chains, and firm productivity

Listed author(s):
  • Carol Newman
  • John Rand
  • Finn Tarp

This paper explores the relationship between imports and firm productivity, focusing on imported intermediates. Using firm-level data on over 20,000 manufacturing firms in Viet Nam, we find evidence for competition-induced productivity gains from trade. We show that gains in intermediate sectors spill-over to downstream sectors such that firms using more inputs from import-intensive sectors experience higher productivity gains. The evidence indicates that the main source of spill-over is better quality, domestically produced inputs. Ignoring the gains from trade through this mechanism may significantly underestimate the impact of trade on productivity.

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File URL: https://www.wider.unu.edu/sites/default/files/wp2016-90.pdf
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Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series WIDER Working Paper Series with number 090.

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Length: 26 pages
Date of creation: 2016
Handle: RePEc:unu:wpaper:wp2016-090
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