Imports, supply chains and firm productivity
Research output: Contribution to journal › Journal article › Research › peer-review
Standard
Imports, supply chains and firm productivity. / Newman, Carol; Rand, John; Tarp, Finn.
In: World Development, Vol. 172, 106371, 12.2023.Research output: Contribution to journal › Journal article › Research › peer-review
Harvard
APA
Vancouver
Author
Bibtex
}
RIS
TY - JOUR
T1 - Imports, supply chains and firm productivity
AU - Newman, Carol
AU - Rand, John
AU - Tarp, Finn
PY - 2023/12
Y1 - 2023/12
N2 - This paper explores how competition-induced productivity gains from imports in intermediate producing sectors transmit through the supply chain. Based on firm-level panel data from Vietnam, we show that in addition to the productivity premium associated with importing intermediate inputs, firms that use domestically-produced inputs from more import-intensive sectors also have higher productivity. We find evidence that import competition leads to product differentiation, in particular higher quality output in sectors where there is greater scope for quality variation, leading to better quality domestically-produced inputs. We also find evidence that non-importing firms that experience productivity gains due to greater import intensity in upstream sectors change their input mix and become more capital intensive. We conclude that ignoring the gains from trade through this mechanism may significantly underestimate the impact of trade on productivity.
AB - This paper explores how competition-induced productivity gains from imports in intermediate producing sectors transmit through the supply chain. Based on firm-level panel data from Vietnam, we show that in addition to the productivity premium associated with importing intermediate inputs, firms that use domestically-produced inputs from more import-intensive sectors also have higher productivity. We find evidence that import competition leads to product differentiation, in particular higher quality output in sectors where there is greater scope for quality variation, leading to better quality domestically-produced inputs. We also find evidence that non-importing firms that experience productivity gains due to greater import intensity in upstream sectors change their input mix and become more capital intensive. We conclude that ignoring the gains from trade through this mechanism may significantly underestimate the impact of trade on productivity.
U2 - 10.1016/j.worlddev.2023.106371
DO - 10.1016/j.worlddev.2023.106371
M3 - Journal article
VL - 172
JO - World Development
JF - World Development
SN - 1873-5991
M1 - 106371
ER -
ID: 381797185